Carl Icahn, who received approval to purchase more Yahoo shares last week, already attempted to file a proxy slate to replace the whole board, which would have included ousting Yang. Although his efforts have been rebuffed thus far, Icahn continues to fight the good fight, according to the Wall Street Journal today.
Mr. Icahn . . . said in an interview that he will seek to remove Mr. Yang if his effort is successful. In the next day, Mr. Icahn said, he plans to make a public statement highlighting his concerns about the actions of Mr. Yang and the board.
Icahn’s fervor appears to be inspired by a court decision yesterday, which includes details of Yang’s and the board’s alleged actions.
Back in May, some Yahoo shareholders (namely the Police & Fire Retirement System of the City of Detroit and General Retirement System of the City of Detroit) filed a complaint against Yang and the Yahoo board, alleging that they purposefully acted to discourage the Microsoft offer. The complaint was originally sealed, but was ordered unsealed yesterday when the Delaware Chancery Court judge decided that Yahoo hadn’t met the burden of proof to show that it should be sealed.
The newly-unsealed complaint includes evidence and statements of the alleged actions, starting back in January 2007 when then-CEO Terry Semel apparently rejected a $40/share offer from Microsoft. (No wonder they were holding out for more this time around.)
[T]he plaintiffs basically contend that CEO Jerry Yang, co-founder David Filo and all of Yahoo’s directors violated their responsibilities as fiduciaries by not just turning down Microsoft’s takeover bid, but actively erecting barriers to the deal through new compensation plans that would essentially make it more advantageous for employees to leave the company in the event of a hostile takeover.
The complaint states that Yang’s personal hatred for Microsoft largely prompted his actions. Perhaps most interesting is this passage from the complaint:
[Yang and Filo] used the threat of pursuing measures that make Yahoo an unattractive acquisition target, including the prospect of Yahoo abandoning its long-term business strategy in favor of a tie-up with Google that would make a Microsoft acquisition a regulatory and litigation quagmire, as an improper means to thwart Microsoft’s advances.
Earlier today, Andy showed us some internal documents from Yahoo that indicated that the day before the Microsoft offer, Yahoo was strongly opposed to the Google deal. Andy asked, “Now that investors know Yahoo executives saw only short-term benefits–and long-term negatives–from a Google deal, will they once again push for Yahoo to go back to the negotiation table with Microsoft?”
I think we have our answer.
The WSJ concludes that “Mr. Icahn said he believes the details of the complaint will help his chances of winning the proxy contest.” But even if the allegations are true and Icahn is successful, would Microsoft be interested in a deal anymore? And if they are, would it be nearly as good as their previous offer(s)?