Carl Icahn has pulled a new card from the deck in his attempt to win seats on Yahoo's ( NSDQ: YHOO) board. In an open letter to Yahoo shareholders, he says he has been in talks with Microsoft CEO Steve Ballmer, and other top execs, and that he is sure Ballmer still wants a major deal with the company. But, he claims, Ballmer will not negotiate with the existing board. His reason: there is too great a risk that Yahoo will be mis-managed between the time a deal is agreed upon and the deal's closing. Says Icahn: "However, Steve made it clear to me that if a new board were elected, he would be interested in discussing 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." On this announcement, shares of Yahoo are up over 9 percent, rising past $23. Full letter.
The letter seeks to address a major whole in Icahn's general argument: whether or not he'd be able to consummate a deal with Microsoft ( NSDQ: MSFT). Previously, the impression had been that Icahn wouldn't be able to get Microsoft back to the table, and that he lacked a serious plan B. Now he's spelling it out. He and Microsoft have talked, and so a vote for the Icahn board is a vote for a deal with Microsoft. It still seems from the letter that Microsoft's priority is for a deal for the search. Icahn, no doubt, would prefer an outright sale, so there may still be a gap on that front. On that question, Icahn says: "I hope to continue to be speaking to Steve over the next few weeks; however, since I do not as yet represent the Yahoo! board, both Steve and I do not wish to get into details over price, or even which of these transactions makes the most sense."
Meanwhile, Microsoft has put out a release, which could basically summed up as "what he said." It won't go into much detail, but, says the company: "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." Release.
As the August 1 shareholder meeting approaches (a little perspective: that'll be six months to the day that Microsoft publicly announced its initial bid), this lays out the stakes in a pretty stark manner. And while Icahn's chances had seemed slim, the assurance from Microsoft that it's not gone for good should go over well by burned shareholders like Bill Miller, who is now sitting on a big pile of shares, trading back near their lows.
Posted By: IndoSourceCode