Yahoo has rejected a joint proposal from Microsoft and investor Carl Icahn that had called for a restructuring and the sale of Yahoo's search business to Microsoft. The Internet company that had fought Microsoft's hostile bid for months has now suggested that the software giant make an offer to acquire all of Yahoo.
The proposal had been made Friday evening, according to a Yahoo statement, and Yahoo was given fewer than 24 hours to accept it. The board said that it rejected it because its recent search deal with Google is financially superior and less risky than Microsoft/Icahn proposal and because the proposal precluded a potential sale of the entire company for a "full and fair price". It also objected to the proposal's plan to immediately replace Yahoo's current board and top management team.
"This odd and opportunistic alliance of Microsoft and Carl Icahn has anything but the interests of Yahoo!'s stockholders in mind," said Roy Bostock, chairman of Yahoo,. "Clearly, Microsoft, having failed to advance in search, is aligning with the short-term objectives of Mr. Icahn to coerce Yahoo! into selling its core strategic search assets on terms that are highly advantageous to Microsoft, but disadvantageous to Yahoo! stockholders. Yahoo's Board of Directors will not allow that to happen. Yahoo!'s Board remains open to any transaction that delivers full value to our stockholders - we just do not believe such a transaction should be dictated by Microsoft and a single short-term investor."
Bostock continued, "After negotiating among themselves without the involvement of Yahoo, Carl Icahn and Microsoft presented us with a 'take it or leave it' proposal under which we would be required to restructure the company, hand over to Microsoft Yahoo's valuable search business and to Carl Icahn the rest of the Company, giving us less than 24 hours to respond. It is ludicrous to think that our board could accept such a proposal. While this type of erratic and unpredictable behaviour is consistent with what we have come to expect from Microsoft, we will not be bludgeoned into a transaction that is not in the best interests of our stockholders."
Yahoo offered to sell the entire company to Microsoft for at least $33 per share, or to negotiate an improved search only transaction. Microsoft rejected both offers, according to Yahoo.
Another aspect of the Microsoft/Icahn proposal that was unappealing to Yahoo, according to the board's statement, was that it called for Yahoo to sell its algorithmic search business and related strategic and valuable intellectual property portfolio for no incremental consideration.
"Microsoft and Mr. Icahn are trying to dismantle the Company and deliver our search business to Microsoft on terms that would be disadvantageous to Yahoo! stockholders. We are prepared to let our stockholders, not Microsoft and Carl Icahn, decide what is in their best interests and we look forward to the upcoming vote," Bostock said.
Microsoft could not immediately be reached for comment.