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Icahn may lead Proxy fight to replace Yahoo! Directors

by on14 May 2008

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On the offense again


Carl Icahn,
the billionaire investor who likes to stay occupied by honing his proxy battle spears, is rumored to be thinking of mounting a proxy campaign on behalf of Yahoo! shareholders.  The Board of Directors of Yahoo Inc. did not reach an agreement with Microsoft for the merger of the two companies, and Icahn, a Yahoo shareholder, wants to bring the companies back to the table again for talks. Microsoft dropped its bid for Yahoo earlier this month after Yahoo turned away Microsoft’s offer of $33.00 per share, or $47.5 billion.  Microsoft had initially offered $31.00 per share, but Yahoo’s Board of Directors nonetheless voted down the higher offer and reportedly demanded $37.00 per share.

Icahn is not a stranger to proxy battles.  He recently successfully pressured Oracle and the Directors of BEA Systems to come to terms for the sale of BEA to Oracle after it had appeared the two companies were at loggerheads and seemed destined to be stuck there.  Icahn has increased his shares percentage ownership and it is rumored that he has about 50 million shares, which is less than four percent of Yahoo’s outstanding shares.

Some have speculated that Icahn might join forces with other hedge fund investors to force a Yahoo sale, but others say that he may decide to run an independent battle.  Whatever his decision, it must be made by May 15th in order to qualify for a proxy slate at the Yahoo Annual Meeting to be held on July 3rd.

Yahoo apparently has more than a few shareholders who would like to sell their shares at Microsoft offering price. Since Yahoo rejected Microsoft’s latest offer, its shares have fallen dramatically. Marc Weingarten, a lawyer who has worked with Carl Icahn on previous proxy battles, indicated that a reunification campaign of the two companies would probably have a good chance of succeeding. Weingarten stated, “Yahoo has a lot of unhappy shareholders. And if someone could press the company in getting something done, I would think there is a decent chance at a transaction."

Icahn has plenty of time and millions of dollars necessary to run a successful proxy campaign.  He is also an old hand at running these types of campaigns and highly skilled at negotiating and pressuring reluctant companies to return to the bargaining table for more talks.

Last modified on 14 May 2008
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