Yahoo/Icahn Letter War Heats Up

Icahn goes all Ike Turner

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It may be safe to officially declare no love lost between Yahoo chairman of the board Roy Bostock and billionaire activist investor Carl Ichan. In fact, we may need Wilmer Valderrama to officiate as these guys play the dozens.

In response to Bostock’s response to his criticism of the so-called "poison pill," an employee retention plan (Icahn calls it a "severance plan") to go into effect in the event of acquisition, Icahn penned a letter accusing Bostock of withholding information and generally kidding himself.

In the letter, Icahn reiterates his disapproval of the severance plan, promises the ousting of CEO Jerry Yang, and lays down a price for the whole shebang, should Microsoft decide it is still interested. Icahn says he found Bostock’s defense of the retention plan "humorous," yet little humor is to be found in the following passage:

"Roy, it is you who ‘misrepresents and misstates the details’ of the plan. Much like the rhetoric in many well known political campaigns, you keep repeating misstatements in the hopes that by repeating misstatements enough times it will convince your shareholders that these misstatements are valid."

Icahn disagrees with just about everything Bostock said in the previous letter, including what to call the plan, and whose course of action is "in the best interests of shareholders."

The retention/severance plan would cost an acquirer $2.4 billion, Icahn argued, and may cost more in productivity as employees looked for ways to get fired or cooked up a "good reason" to resign. In addition, Icahn accuses Bostock of not being fully upfront with shareholders:

"The egregious magnitude of the dollar amount cost of the plan was never fully disclosed, nor was the email from your compensation advisor calling the plan ‘nuts.’"

Ouch. Sounds like somebody just lost a racket ball buddy.

Icahn implied Microsoft lost interest in an acquisition once the plan was fully comprehended. In response to Bostock’s fear of what would happen if Icahn and his nominees took control of Yahoo, Icahn outlined five initial tasks:

  1.  No poison pill.
  2.  No Jerry Yang; he was supposed to be temporary anyway.
  3.  No alternative transactions below $33 per share. Better, no alternative deals at all because Mr. Softy    is mean when he’s jealous.
  4. No love like Microsoft love: Push the board into a karaoke rendition of "Baby Come Back."
  5.  No Google escape hatch. If Microsoft really doesn’t want Yahoo anymore, then a search deal with Google will be pursued, but only if Google doesn’t get mad when Microsoft comes back to town.

In addition to a couple of more gut-punches aimed at Bostock, Icahn closed with a proposed price, available exclusively to Microsoft. "In my opinion, Microsoft does not believe you will ever sell the entire company on a friendly basis. So why don’t you stop dancing around the subject and publicly offer to sell the company to Microsoft for $34.375 per share and promise to cooperate completely?"

The only thing missing: Now get in the kitchen and make me a chicken pot pie!

After all that, Yahoo issued a paragraph of response:

"Leaving aside Mr. Icahn’s inaccurate interpretation of our retention plan, we again note that he has no credible plan to operate Yahoo!. We believe that Mr. Icahn’s suggestion that we cancel our retention plan would have a destabilizing impact on Yahoo! and would clearly not be in the best interests of our shareholders. Furthermore, his suggestion that we put out a price publicly to see if Microsoft will alter its stated position is ill-advised. As we have stated numerous times publicly and privately, we are open to any transaction including a sale to Microsoft if it is in the best interests of shareholders."

The August shareholder meeting should be interesting. Maybe the producers of MTV’s Real World should be on hand to capture the fireworks.




Read Icahn’s letter.



Yahoo/Icahn Letter War Heats Up
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