Carl Icahn, the billionaire hedge fund boss renowned as one of the world’s most aggressive corporate raiders, has now set his sights on internet giant Yahoo. Icahn is hopping mad that Yahoo’s board decided to reject Microsoft’s $47bn offer (a 72% premium to its share price) without consulting shareholders, and is now seeking to get rid of every last one of them – to be replaced by Icahn himself and nine carefully-selected chums. If his boardroom coup succeeds, he plans to get straight back on the phone to Microsoft.
In a letter to the board, Icahn said he was ‘perplexed by the board’s actions’, suggesting the directors had ‘acted irrationally and lost the faith of shareholders and Microsoft’ by rejecting the bid. It was also ‘unconscionable’ that shareholders were not consulted – because a tie-up was clearly Yahoo’s best chance of competing with Google. ‘It is quite obvious that Microsoft’s bid of $33 per share is a superior alternative to Yahoo’s prospects on a standalone basis’, he growled.
Icahn has spent the last month accumulating a 4% stake in Yahoo at a cost of about $1bn, and he’s seeking regulatory permission to snap up another $2.5bn of shares in the coming week – so he’s going to be hard to ignore (he also claims to be speaking for other minority shareholders, although nobody seems entirely sure how many). And with the stock price now languishing well below Microsoft’s $33-per-share offer, he clearly thinks there are easy pickings to be made.
Of course, this whole plan is predicated on the assumption that Microsoft is still willing to play ball. Having gone off in a sulk after Yahoo rejected what seemed like a pretty generous offer, CEO Steve Ballmer has actually said that his pursuit of Yahoo is over – he’s since been linked with a possible approach for AOL or Facebook (although this may have been a cunning plan to make Yahoo jealous). As a result, Yahoo doesn’t technically have a bid on the table at the moment – as the board was quick to point out in its riposte to Icahn today (in which they basically suggested that the corporate raider didn’t have a clue what he was talking about).
However, we find it a bit hard to believe that Steve will refuse to take the call if he’s being offered a deal at the same kind of price as before. And either way, now that Icahn’s in town, it’s going to be a very uncomfortable few weeks for Yahoo CEO Jerry Yang and his fellow directors...