Yahoo! rips into 'ludicrous, absurd' Microsoft/Icahn offer

Stephen Withers
Monday, 14 July 2008 11:34

IT Industry - Strategy

Yahoo! officials also pointed out that back in June, Icahn urged Yahoo not to sell its search business separately to Microsoft. According to Yahoo! officials, when Icahn was interviewed on a TV program, he said "... it's crazy for this company now to do this alternative deal and give the store away, because obviously, an alternative deal is a poison pill because once you've done an alternative deal and given the search to Microsoft, you don't need Microsoft to buy you anymore. So, that would be a poison pill..."

Yahoo! seems intent on going it alone unless a good deal can be achieved for its shareholders. The problem is that anything other than a cash offer involves uncertainty, and even that has to be compared with future benefits - ie, stock appreciation and dividends - that cannot be forecast with certainty.

Earlier this month. Microsoft indicated it would resume discussions with Yahoo! if a new board is elected at August's annual meeting. The Yahoo! board challenged Microsoft to buy the company, but the response was another attempt to buy just the search business.

In February, Microsoft made a $US31 per share bid for Yahoo! that was rejected by the board.

Microsoft then threatened a proxy battle if the deal did not go ahead, but the Yahoo! board stood its ground.

Microsoft did not carry through with its threat and instead withdrew its bid in May, with CEO Steve Ballmer saying Yahoo!'s asking price of $US37 was too high.

In mid-May, billionaire investor Carl Icahn put forward a slate of replacement directors, claiming the present board had acted irrationally by rejecting Microsoft's advances.

So what's still ahead in this tortured tale? Please read on.