Microsoft has made clear its intentions: to work with billionaire Carl Icahn for the end of Yahoo. So, this is Plan B: Snatch Yahoo search in a boardroom coup.
In an official statement issued today, Microsoft revealed that "in the past week we have had the opportunity to discuss with Carl Icahn the prospects for a possible agreement between Microsoft and Yahoo." Presumably that agreement would lead to Microsoft acquiring Yahoo's core search capabilities, which, as I've said, would lobotomize the media company.
The billionaire board buster bolsters his own position in a separate letter:
"During the past week I have spoken frequently with Steve Ballmer, CEO of Microsoft. Several of our conversations have lasted as long as an hour. Also, a few of our discussions have taken place while other top executives, such as Kevin Johnson, participated. Our talks centered on the industry in general but, more importantly, on how Yahoo and Microsoft can do a transaction together."
The statements clearly expose Microsoft's back-room corporate maneuverings. CEO Steve Ballmer and Co. aren't so squeaky clean after all. Microsoft's decision not to engage Yahoo in a proxy fight seemed sensible at the time—Microsoft withdrew its bid and decided to fight no longer. From Steve's May 3 Yahoo bid withdrawal letter:
"After giving this week's conversations further thought, it is clear to me that it is not sensible for Microsoft to take our offer directly to your shareholders. This approach would necessarily involve a protracted proxy contest and eventually an exchange offer. Our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo undesirable as an acquisition for Microsoft."
But that's not exactly true. Carl Icahn already was publicly hanging around, ready to take some action. Microsoft executives had to know this, and they may even have been contacted by the billionaire board buster. Microsoft didn't need to engage in a nasty proxy fight, because Carl was ready to do it again, as he had done with other companies.
Now the two sides are talking and not just to each other. Today's Microsoft letter was clearly for the eyes of Yahoo shareholders, whose votes Carl Icahn needs for orchestrating a proxy-fight-driven boardroom coup. From Microsoft's letter released today:
"Despite working since Jan. 31 of this year, as well as in the early part of last year, we have never been able to reach an agreement in a timely way on acceptable terms with the current management and Board of Directors at Yahoo. We have concluded that we cannot reach an agreement with them. We confirm, however, that after the shareholder election Microsoft would be interested in discussing with a new board a major transaction with Yahoo, such as either a transaction to purchase the 'Search' function with large financial guarantees or, in the alternative, purchasing the whole company."
If Yahoo shareholders want a deal with Microsoft, it has got to be with a new board. That's going to be a long-term losing deal for Yahoo shareholders, methinks. Their best return would come from a full Microsoft acquisition, something that would be bad for Microsoft. Obtaining Yahoo search would be good for Microsoft but be bad for Yahoo in the long term. Search is the core around which everything else revolves. Take away search and Yahoo spins apart, painfully, over several years.
I find this just laughable, from Microsoft's letter:
"As Mr. Icahn notes in his statement today, it would be premature to discuss at this time important details such as the price or other terms of a possible transaction. We respect the right of Yahoo's shareholders to determine the destiny of their company, and we do not intend to engage in ongoing commentary on these issues in advance of Yahoo's shareholder meeting."
"Respect the right" to "determine the destiny?" Oh, please! Microsoft has been trying to seize hold of Yahoo's destiny since making the unsolicited offer. And today's letter is all about influencing the destiny "in advance of Yahoo's shareholder meeting."
More from Microsoft's letter:
"As we explained on June 12 when Yahoo announced an agreement with Google, we believe that our proposed search acquisition and partnership would have delivered superior value to Yahoo's shareholders and the marketplace as a whole. We have not changed our position, even as we continue to move forward with our own online search and advertising offerings. We therefore welcome interest by Mr. Icahn in pursuing this and other discussions.
"While of course there can be no assurance of a future transaction, we will be prepared to enter into discussions immediately after Yahoo's shareholder meeting if a new board is elected."
Interpretation: Microsoft will hold no more discussions with Yahoo's current board of directors; Microsoft will engage Carl Icahn discussions; and a deal, if any, will only happen with a new board. How's that for trying to influence the vote?
In a shareholder letter responding to Microsoft and Carl Icahn, Yahoo asserted willingness to re-engage Microsoft discussions, and rightly identified what's really going on here.
"Mr. Ballmer and Mr. Icahn have teamed up in an apparent effort to force Yahoo into selling to Microsoft its Search business at a price to be determined in a future 'negotiation' between Mr. Icahn's directors and Microsoft's management. We feel very strongly that this would not lead to an outcome that would be in the best interests of Yahoo's stockholders."
Right, right. Microsoft no longer wants to buy Yahoo, just the search business. Yahoo's board recognizes that such a deal would effectively destroy the company. So Microsoft and Carl Icahn have engaged on an alternative plan, which would be quite good for the software giant. Microsoft would get the best asset from Yahoo, table the Google-Yahoo search deal and send teetering Yahoo as a competitor.
No comments:
Post a Comment