Microsoft and Carl Icahn proposed a new offer to Yahoo! on Friday, and according to the Yahoo! press release (if you can believe Yahoo! press releases, and a college level course on “public relations spin” could be taught using only Yahoo! press releases), Yahoo! was given less than 24 hours to accept a “take it or leave it” offer for their search business. They left it. At the same time, Yahoo! fairly begs Microsoft to buy the whole company (for “at least $33”), something they seemingly avoided at all costs just a few months ago. According to the press release:
Yahoo!’s Board points out that a transaction to acquire the whole company would be much more straightforward and involve far less risk than the new proposal or any similar alternative. The Board believes a whole company transaction could be negotiated and executed prior to August 1st. In rejecting the Microsoft/Icahn proposal, Yahoo! not only repeated its offer to sell the entire Company to Microsoft for at least $33 per share, but also offered to negotiate an improved search only transaction. Microsoft rejected both offers.
Yahoo! ridicules not only Microsoft but Icahn in the press release, saying
“This odd and opportunistic alliance of Microsoft and Carl Icahn has anything but the interests of Yahoo!’s stockholders in mind. 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”
“It is ludicrous to think that our Board could accept such a proposal. While this type of erratic and unpredictable behavior 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”.
At the same time, Yahoo! admits that “(w)hile the Board acknowledges that the current proposal contains a number of improvements over Microsoft’s earlier proposal”, the press release goes on to poke holes in the latest offer, and concludes by welcoming what is really shaping up to be a donnybrook on Aug. 1:
"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.”
Clearly, however, Microsoft has found a handy blunt instrument in Mr. Icahn with which to bludgeon the current board. This latest move, if the terms were as “ludicrous” as Yahoo! makes them out to be, certainly isn’t aimed at offering up a peaceful solution. Yahoo! rejected offers that were far better than this before Microsoft pulled out of their proposed deal on May 3rd. Yahoo! shareholders are going to want some compensation on or by August 1, as Yahoo! shares had touched $20 before this latest round of Microsoft intervention began last week. It is almost as ludicrous as Microsoft’s latest offer to believe that Yahoo! will walk away from the shareholders meeting on August 1st unchanged and/or unscathed. Yet Microsoft’s heavy handed tactics are wildly unpopular, and the “acquisition by bludgeon” path they seem to have embarked on may very well backfire.
In any event, we’re dragged into another weekend of this, the acquisition that wouldn’t die. Yogi Berra said “it ain’t over til it’s over”, but if it ain’t over by August 1st, we all may need some bludgeoning.