The major problem with Carl Icahn’s proxy fight to take over Yahoo has always been that he offered no remedy for the company’s ills and the shareholders’ discontent other than selling part or all of it to Microsoft and it was not clear that Microsoft would play. That doubt was dispelled today when Icahn issued an open letter to Yahoo shareholders saying that Microsoft was still willing to talk, but had concluded that it was impossible to reach an agreement with the current board and Microsoft confirmed it:
Despite working since January 31 of this year, as well as in the early part of last year, we have never been able to reach an agreement in a timely way on acceptable terms with the current management and Board of Directors at Yahoo!. We have concluded that we cannot reach an agreement with them. 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.
As Mr. Icahn notes in his statement today, it would be premature to discuss at this time important details such as the price or other terms of a possible transaction.
While of course there can be no assurance of a future transaction, we will be prepared to enter into discussions immediately after Yahoo!’s shareholder meeting if a new board is elected.
One has to observe that holding a one bidder auction is hardly the most effective way to realize full value for Yahoo and that is exactly what Icahn’s plan amounts to. The question then becomes whether Yahoo shareholders are so exasperated that even betting on that uncertain return seems like a good deal.