Over the past few weeks, Carl Icahn, the billionaire investor and troubled-firm troublemaker, has been buying up shares in Yahoo, looking for all the world like he was preparing to oust the company's board of directors. Turns out, yup, that was his plan all along.
In a letter to Yahoo's chairman, Roy Bostock, Icahn notified the company today that he'd be putting up a slate of alternate board members to replace current management.
Icahn's board members favor a deal with Microsoft; if shareholders approve them, they'd try to set up negotiations with MS, which walked away from a merger with Yahoo when Yahoo demanded a higher price.
It was that demand that got Icahn's goat. In his letter, Icahn says:
It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72 percent premium over Yahoo's closing price of $19.18 on the day before the initial Microsoft offer. I and many of your shareholders strongly believe that a combination between Yahoo and Microsoft would form a dynamic company and more importantly would be a force strong enough to compete with Google on the Internet.
Icahn, who says that he has the support of other Yahoo shareholders, notes that he's recently purchased 59 million shares of Yahoo and has asked the Federal Trade Commission for clearance to purchase $2.5 billion more of the firm.
As the New York Times takeover expert Andrew Ross Sorkin notes, Icahn is often successful in his bids to change governance at companies, but he's had some failures -- he failed in his effort to change the board at Time Warner.
Moreover, even if Icahn's board gets in, there's no indication that Microsoft will be willing to deal with them. The company may simply have soured on Yahoo.