A Truce for Yahoo, but the War May Not Be Over
July 21, 2008
From NYTimes:
Carl C. Icahn backed down over the weekend and worked out an agreement with Yahoo to join Yahoo’s board, along with two more people on his slate, which had been set to go to shareholders for a vote on Friday. Yahoo’s statement is here.
The tipping point may have been the decision by Bill Miller, the influential portfolio manager at Legg Mason, to vote his 4.4 percent stake in Yahoo in favor of the company’s slate of candidates. I’d assume that over the weekend, Mr. Icahn realized that a majority of shareholders held similar views.
This can’t exactly be seen as a vote of confidence in Yahoo’s current management. Rather it is an expression of a lack of confidence in Mr. Icahn’s ability to solve Yahoo’s problems.
A troublemaking shareholder like Carl Icahn can make a difference when there is a relatively easy decision a company could make that for some reason its management is resistant to. For the first part of the year, the narrative fit that template: Microsoft wanted to buy the company and Jerry Yang, Yahoo’s chief executive, didn’t want to sell it. If that was still true, Mr. Icahn’s board slate would probably sail to victory.
But in the convoluted story this has become, Microsoft says it no longer wants to buy Yahoo and Mr. Yang is desperate to sell it. If Mr. Icahn found himself in control of Yahoo, what could he do? He suggested he may just sell Yahoo’s search business to Microsoft, leaving shareholders owning a portal with some serious problems and a board taking cues from an investor who hardly uses a computer.
Microsoft (MSFT) makes another offer for Yahoo! (with Icahn)
July 13, 2008
From Here:
Late Friday, Microsoft (NASDAQ:MSFT) and Carl Icahn made an offer to the Yahoo! (NASDAQ:YHOO) board. Microsoft would buy Yahoo!’s search business and Icahn would take the rest of the company. Yahoo! was given one day to respond.
The Yahoo! board rejected the offer.
According to Reuters, “This odd and opportunistic alliance of Microsoft and Carl Icahn has anything but the interests of Yahoo’s stockholders in mind,” Yahoo Chairman Roy Bostock said in the statement.
Michael Arrington says Microsoft has Crossed A Line
July 8, 2008
From Techcrunch:
Until today I’ve largely been a big supporter of Microsoft’s efforts to acquire Yahoo. A couple of days before Microsoft placed its initial $44.6 billion bid for the company, I told Fox Business Channel that a Microsoft merger had to happen to save Yahoo (and I certainly wasn’t the first to say this, I just had magnificent timing).
Throughout the ups and downs and stupendous drama of the negotiations, I held firm that a deal was in the best interests of both companies. Not because I’m a huge Microsoft fan, but because the health of the Internet requires a competitive search market. Google controls too much market share and too much related search revenue. A counterbalancing force is needed to keep the system healthy. And Microsoft or Yahoo standing alone cannot counter Google.
But when Microsoft pulled its bid just as Yahoo was about to accept and replaced it with a search buyout deal that I described as equivalent to them trying to get the milk for free instead of buying the cow, I began to wonder if things were getting out of hand. Since then, Yahoo has quite literally prostrated themselves before Microsoft to get a merger done, even perhaps at a price much lower than Microsoft’s original bid. And Microsoft has largely toyed with them.
Yesterday’s shenanigans, however, clearly crossed a line. Microsoft and activist Yahoo shareholder Carl Icahn jointly announced that they’ve been talking, and that Microsoft may be willing to entertain a full buyout offer once again. But only on the condition that Yahoo’s board of directors is replaced: “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.”
Microsoft to Yahoo shareholders: replace Yahoo board and we’ll talk buyout
July 7, 2008
REDMOND, Wash. — July 7, 2008 — Microsoft Corp. today issued the following statement:
In the past week we have had the opportunity to discuss with Carl Icahn the prospects for a possible agreement between Microsoft and Yahoo!.
Despite working since January 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.
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.
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.
Yahoo Strikes Deal With Google as Microsoft Talks End
June 12, 2008
Yahoo! Inc. agreed to let Google Inc. sell some of the advertisements it runs alongside Internet search results, seeking to shore up sales after ending talks with Microsoft Corp. about a combination.
The deal may add $800 million a year to sales, Sunnyvale, California-based Yahoo said today in a statement. The companies will delay implementing the program for up to three and a half months to give the U.S. Justice Department time for review.
Yahoo shares sank 10 percent today after the company said talks with Microsoft failed. The partnership with Google may boost the amount of money Yahoo gets when people click on ads, part of Chief Executive Officer Jerry Yang’s effort to deflect criticism from investor Carl Icahn, who blamed Yang for scuttling a $47.5 billion bid from Microsoft.
“Abdicating search to Google puts Yahoo in an untenable strategic position in order to obtain short-term gains,” Soleil Securities Group Inc.’s Laura Martin said in an interview. The Los Angeles-based analyst advises investors to hold Yahoo shares.
The agreement, which covers sites in the U.S. and Canada, may add as much as $450 million in operating cash flow in the first 12 months, Yahoo said. The partnership isn’t exclusive, meaning that other companies in addition to Yahoo and Google will be able to sell ads to appear on Yahoo’s pages. Yahoo’s revenue last year was $6.97 billion.
- from Bloomberg
Icahn wants to skullf*ck Yahoo’s Jerry Yang
June 3, 2008
The billionaire investor Carl C. Icahn stepped up the pressure on Yahoo Tuesday, vowing to remove Jerry Yang, its chief executive, if he succeeds in replacing the company’s board with his own slate of directors.
Mr. Icahn said newly unsealed court documents show that Mr. Yang and Yahoo’s board did not seriously consider a $44.6 billion acquisition offer from Microsoft and implemented a costly employee-retention plan that is a barrier to any acquisition.
“I don’t think anybody ever understood the magnitude of what Yahoo did to do avoid making a deal,” Mr. Icahn said in an interview.
Mr. Icahn had already started a proxy fight to replace Yahoo’s board, which includes Mr. Yang, but had not previously said that he also planned to strip Mr. Yang of his chief executive role.
“In my opinion, you might have to get rid of Jerry and part of the board to bring back Microsoft,” Mr. Icahn said.
- From NYtimes
Yahoo was opposed to Google partnership
June 3, 2008
Yahoo originally rejected the idea of co-operating with Google on search advertising, reaching the decision just prior to Microsoft’s failed takeover bid, it has been revealed.
Last month Yahoo conducted a two-week trial of running adverts on its search results that were provided by the Mountain View firm, instead of using its own advertising platform. Google chief executive Eric Schmidt has suggested that further co-operation between the two companies could take place in the near future.
But paperwork released yesterday as part of a Yahoo court case has revealed that the firm was formerly opposed to such a partnership.
A statement dated 30 January, the day before Microsoft made its original $44.6bn (£22.7bn) offer, dismissed any such collaboration as being bad for market competition.
“We are focused on long-term value creation rather than short-term gains,” said the document.
“Short-term analysis of the revenue potential of outsourcing monetisation may not take into account the longer term impact on the competitive market if search becomes an effective monopoly.”
- From here
Microsoft proposes to buy Yahoo search
May 19, 2008
Microsoft Corp has proposed to buy Yahoo Inc’s search business and take a minority stake in the Web pioneer, stopping short of a full-out merger, a person familiar with the discussions said on Monday.
As part of the deal, Yahoo would sell its Asian assets including significant minority stakes in Yahoo Japan and China’s Alibaba Group, while Microsoft would buy a chunk of what remains of the company, the source said.
The talks were revealed by the two companies on Sunday, but they declined to reveal the terms of the discussions. Earlier this month, Microsoft walked away from a proposal to acquire Yahoo for $47.5 billion, or $33 per share, after Yahoo rebuffed the offer, saying it would only settle for $37 a share.
The new deal, if completed, would forge an alliance between the two companies that would represent an alternative means of competing with rival Google Inc, whose ubiquitous search engine has made it an online advertising powerhouse.
- From Reuters
Microsoft in new talks with Yahoo!
May 18, 2008
In a statement Sunday, Microsoft says it is considering a different kind of deal with Yahoo as it pursues ways to improve and expand its online services and advertising business. “Microsoft is considering and has raised with Yahoo an alternative that would involve a transaction with Yahoo but not an acquisition of all of Yahoo,” the statement said. “Microsoft is not proposing to make a new bid to acquire all of Yahoo at this time, but reserves the right to reconsider that alternative depending on future developments and discussions that may take place with Yahoo or discussions with shareholders of Yahoo or Microsoft or with other third parties.” - From AP
Microsoft Says It Proposed Collaborating With Yahoo
May 18, 2008
Microsoft Corp., the software maker that withdrew its $47.5 billion offer to buy Yahoo! Inc., proposed an alternative transaction with the Internet company to expand its online services and advertising businesses.
Microsoft is considering an alternative agreement that wouldn’t involve acquiring the whole of Yahoo, according to a statement from Microsoft today. Microsoft said it reserves the right to reconsider a bid to acquire Sunnyvale, California-based Yahoo.
Microsoft spent three months wooing Yahoo, owner of the second-most popular search engine, to compete with Google Inc. in Internet searches and online advertising. Ad sales reached $41 billion worldwide last year, according to Piper Jaffray & Co. Microsoft projected that may almost double by 2010.
Last week, Yahoo came under pressure from billionaire investor Carl Icahn to revive negotiations with Microsoft, which walked away from its offer May 3.
Icahn, who has threatened a proxy battle and has the backing of Yahoo shareholder Paulson & Co., said the combination would create “a force strong enough” to fight off market leader Google.
Icahn disclosed that he owned 10 million Yahoo shares and options to buy 49 million more. He submitted his own slate of nominees for Yahoo’s board, including himself, Dallas Mavericks owner Mark Cuban and former Viacom Inc. CEO Frank Biondi. All 10 of Yahoo’s current directors are up for re-election at the annual meeting on July 3.
- From Bloomberg
Alarm at Google Yahoo partnering
May 12, 2008
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Alarm at Google Yahoo partnering
By Maggie Shiels
Technology reporter, BBC News, Silicon Valley
The exterior of Yahoo headquarters in Sunnyvale, California
No firm deal with Google has actually been announced
Regulators in the US are being urged to investigate any potential online advertising and search partnership between Google and Yahoo.
The call by a coalition of 16 American civil rights and rural advocacy bodies comes despite the fact no firm deal has actually been announced.
“We all suffer in such mega mergers,” Gary Flowers of the Black Leadership Forum told BBC News.
The justice department is examining a trial the companies did in April.
It has been widely reported that it is looking into the anti-trust implications of last month’s two-week test.
However, the department says it has no comment on the coalition’s demands because there is no definitive agreement between Yahoo and Google at the moment.
But reports say that the two companies are presently hammering out the intricacies of a future potential advertising and search agreement, and are sharing their plans with antitrust regulators.
At Google’s shareholder meeting on Thursday, Chairman Eric Schmidt said: “If there were a deal [with Yahoo], we would anticipate structuring the deal to address the anti-trust concerns that have been widely discussed.”
- From BBC
Ballmer’s kiss off letter to Yang, and Yang’s response
May 4, 2008
Dear Jerry. After over three months, we have reached the conclusion of the process regarding a possible combination of Microsoft and Yahoo!. I first want to convey my personal thanks to you, your management team, and Yahoo!’s Board of Directors for your consideration of our proposal. I appreciate the time and attention all of you have given to this matter, and I especially appreciate the time that you have invested personally. I feel that our discussions this week have been particularly useful, providing me for the first time with real clarity on what is and is not possible. Read more
Breaking: Microsoft Walks…
May 3, 2008
fter a months-long standoff, Microsoft has abandoned its bid for Yahoo, people involved in the discussions today. Microsoft confirmed to BoomTown that talks between the two companies, which began in earnest Friday, collapsed Saturday when they could not agree on a price. According to sources close to Microsoft, the talks broke down this afternoon after a face to face meeting in the Seattle area that included Microsoft CEO Steve ballmer, Microsoft exec. kevin johnson, and Yahoo co-founders Jerry Yang and David Filo. According to sources, Microsoft offered $33 a share,Yahoo countered with $37 a share. - From Boomtown
Microsoft increases Yahoo offer, upped to over $31 per share
May 3, 2008
Microsoft Corp. finally dangled a higher takeover bid in front of Yahoo Inc. Friday, hoping to reach a friendly deal after weeks of saber rattling.
The Redmond, Wash.-based software maker upped its offer beyond the original value of $44.6 billion, or $31 per share, according to a person familiar with the matter. The specifics of the new offer weren’t known by this person, who didn’t want to be identified because the negotiations are still confidential.
The New York Times, citing unnamed sources, reported Microsoft boosted the offer by “by several dollars” per share, lending weight to the assertion by many market analysts that Microsoft can afford to pay up to $35 a share.
– From Variety
Microsoft-Yahoo deal may go hostile Friday
May 2, 2008
Microsoft Corp. may go hostile in its bid for Yahoo Inc. as soon as Friday, according to a published report.
Citing unnamed people familiar with the matter, the Wall Street Journal reported early Friday that the world’s largest software maker may be preparing to go straight to Internet pioneer Yahoo’s shareholders.
An announcement was “likely” to come Friday, according to the report, though the newspaper said its sources cautioned that Microsoft may delay.
Chief Executive Steve Ballmer told employees in a company assembly Thursday that he knows how much he’d spend to buy Yahoo and accelerate his company’s Internet play.
“We’re willing to pay for that at some level, and beyond that level we’re not willing to pay for it. I know exactly what I think Yahoo is worth to me,” the executive said. “I won’t go a dime above, and I will go to what I think it’s worth if that gets the deal done.”
But he didn’t offer a figure, and he didn’t say whether Microsoft is considering raising its unsolicited bid, worth $44.6 billion at the time it was made in early February.
The offer is currently worth about $42.4 billion, or $29.48 per share, based on Microsoft Corp.’s closing stock price Thursday. Yahoo Inc. has rejected the offer, saying it undervalues the company. Microsoft’s board has been considering whether to raise the bid to as much as $33 per share, according to The Wall Street Journal.
Via Yahoo
Microsoft plans next Yahoo move
April 27, 2008
Now that its friendly offer for Yahoo expired on Saturday, Microsoft has two options: launch a hostile takeover attempt or withdraw and seek other ways to grow its online advertising biz. The tech giant has given every indication it will go the hostile route and take its case directly to Yahoo shareholders.
Under this scenario, there is no guarantee how much it might pay for Yahoo.
Microsoft offered $31 per share in a late January bid valued at $44.6 billion, but Yahoo continues to maintain that the company is worth more than that. Last week, co-founder Jerry Yang cited its first quarter earnings to bolster the case for a bigger bid, but Microsoft didn’t see it the same way. On Friday, chief exec Steve Ballmer called the original cash-and-stock offer “quite generous,” pointing out that it was roughly 80 times earnings.
Ballmer then reiterated the company’s aim to take the plan directly to shareholders should Yahoo fail to warm up to the offer by Saturday’s deadline.
The Yahoo AOL Teamup?
April 9, 2008
Yahoo! Inc., fending off Microsoft Corp.’s $44.6 billion acquisition offer, is close to striking an agreement to combine operations with Time Warner Inc.’s AOL unit, a person familiar with the situation said.
Yahoo would gain control of AOL and give Time Warner a 20 percent stake in the combined entity, said the person, who asked not to be identified because the talks aren’t public. The cash from Time Warner would enable Yahoo to buy back billions of dollars of its own stock under the plan, the person said.
As part of its effort to thwart Microsoft’s $31-a-share offer, Yahoo said today it is testing Google Inc.’s advertising technology on a limited number of search results. Yahoo rejected Microsoft’s bid in February, saying it was too low. Last week, Microsoft threatened a proxy fight to take control of Yahoo’s board.
“They’re delay tactics,” Laura Martin, an analyst at New York-based Soleil Securities Corp., said of Yahoo’s actions. She rates Yahoo shares “hold.” “They’re just going to irritate Microsoft and accelerate a proxy fight.”
Via Bloomberg
Yahoo to Microsoft “Make us an offer we can’t refuse”
April 7, 2008
Yahoo Inc is not opposed to Microsoft Corp’s bid for the Web media company, as long as it is at the right price, Yahoo’s board said on Monday in a letter to Microsoft Chief Executive Steve Ballmer.
“We have continued to make clear that we are not opposed to a transaction with Microsoft if it is in the best interests of our stockholders,” the letter said. “Our position is simply that any transaction must be at a value that fully reflects the value of Yahoo, including any strategic benefits to Microsoft, and on terms that provide certainty to our stockholders.”
Yahoo is responding to a three-week deadline issued by Ballmer in a letter to Yahoo on Saturday for Yahoo to agree to Microsoft’s $31 a share cash-and-stock offer or risk seeing the bid lowered. “Our board has been actively and expeditiously exploring our strategic alternatives to maximize stockholder value, a process which is ongoing,” Yahoo’s board said on Monday. “All of these actions have been driven by our overarching commitment to maximize stockholder value.
Via Reuters
Yahoo, Time Warner step up combination talks: report
March 5, 2008
“Yahoo Inc (YHOO.O) and media conglomerate Time Warner Inc (TWX.N) have stepped up talks to create an alternative to Microsoft Corp’s (MSFT.O) offer to take over the Web company, the Wall Street Journal reported on Wednesday citing people familiar with the matter.”
Via Yahoo News
Report: Yahoo Board to Reject Microsoft
February 10, 2008
Sorry Mr. Bill….
“Yahoo Inc.’s board plans to reject Microsoft Corp.’s bid to buy the Internet pioneer, The Wall Street Jornal reported on its Web site Saturday. Read more