Icahn, Microsoft Set the Record Straight on Yahoo!

By Michael Santo
Editor-in-Chief, RealTechNews

Late Saturday, Yahoo! rebuffed another offer from Microsoft, one that would have resulted in Microsoft getting Yahoo!’s search business and Carl Icahn taking the rest. While Yahoo!’s press release was very detailed, on Monday both Carl Icahn and Microsoft felt they had to present their own take on things, including correcting what they perceived as errors.

Icahn said, in an open letter to Yahoo! shareholders:

Over the years I have attempted to make changes at many companies but I have yet to see a company distort, omit and twist events and facts in the manner that Yahoo! has done in their press release issued Saturday night, July 12th.

• Yahoo! in their Saturday night press release makes much of the fact that they were only given 24 hours to decide on the Microsoft offer because of the time constraints relating tothe proxy fight, but neglects to mention that they were offered more time if they would be willing to postpone the annual meeting for a short period.

• Yahoo! conveniently neglects in its press release to tell you about the extremely important above mentioned guarantees that Microsoft was willing to make;

• Yahoo! tells you in their press release that a condition of the deal was the immediate replacement of the current board and removal of top management. Yahoo! neglected to mention we were willing to discuss keeping a number of the current board members and Jerry Yang as Chief Yahoo!

• Yahoo tells you the Microsoft proposal precludes the potential sale of all Yahoo! however, they neglect to tell you that that train has left the station in that Microsoft is no longer willing to buy all of Yahoo! with the current board overseeing the company.

• Yahoo!’s press release states that “this odd and opportunistic alliance of Microsoft and Mr. Icahn has anything but the interest of Yahoo stockholders in mind”, raising the innuendo that I am on Microsoft’s side in this manner. That is patently ridiculous. Since Yahoo! failed to consummate a transaction with Microsoft this year, I have spent hours and hours attempting to get the parties together because I believe that it is beneficial to Yahoo! shareholders to have a deal with Microsoft and I have worked hard trying to make it happen. It is important to note that my funds and affiliates own 70 million shares of Yahoo and own no shares of Microsoft or Google while the current board outside of Jerry Yang owns only the shares they have received from Yahoo for being directors. My interests are aligned with yours and not Microsoft and I think it is in our interest to have this transaction consummated so that we can get value much in excess of the recent and current market for Yahoo! shares.

Seriously, though, tell us how you really feel.

At the same time, however, Microsoft’s press release slightly contradicts Icahn’s. Microsoft does not mention a timetable, but Icahn does, above - though he also says they (Yahoo!) could have received an extension.

Microsoft also said that the deal was actually requested by Yahoo! chairman Roy Bostock and that Microsoft had been told Yahoo might accept a deal if Microsoft raised its bid on certain terms of the agreement.

Specifically, on Thursday afternoon, July 10, Mr. Bostock called Steve Ballmer’s office to arrange a call. On that subsequent call, Mr. Bostock told Mr. Ballmer that “with substantial guarantees on the table and an increase in the TAC (traffic acquisition cost) rate, there are the pillars of a search only deal to be done.” Mr. Bostock encouraged Mr. Ballmer to submit a new proposal to Yahoo! for a search-only deal reflecting these terms.

So, what is going to happen now? Sounds like a case of he said / she said. Let me just say, that August 1 shareholders meeting ought to be a doozy!