Sunday, July 13, 2008
Yahoo Rejects the Proposal From Microsoft, Icahn
Yahoo rejected the offer of Microsoft to acquire Yahoo's search business and billionaire investor Carl Icahn that would have included the sale of Yahoo's search business to Microsoft. . . The offer, which was offered on Friday in cooperation with Yahoo investor Carl Icahn, was a variation on Microsoft's previous offer to acquire Yahoo's search business in exchange for cash, a partial stock buyout and revenue guarantees, required the complete replacement of the Yahoo board and executive management team stated that there was no room for negotiation.
Yahoo rejected it, saying that the Google search deal they've signed is a better deal and adding that the requirement to replace the board and executive team is "absurd and irresponsible given the complexity of the deal."
Icahn has criticized Yahoo Chief Executive Officer Jerry Yang for failing to close a deal with Microsoft, the world's biggest software maker. Microsoft, which on May 3 withdrew an offer to buy Yahoo, said on July 7 it may renew talks for a deal if Icahn, who controls about 69 million Yahoo shares, succeeds in ousting Yang and his board.
Yahoo formally offered to sell itself whole to Microsoft in the release as well, saying "the Board believes a whole company transaction could be negotiated and executed prior to August 1st," and suggesting Microsoft's original $33 offer will work just fine for them right now.
Yahoo! Suggests Microsoft Make A Proposal To Acquire Whole Company
SUNNYVALE, Calif., Jul 12, 2008 (BUSINESS WIRE) ¿ Yahoo! Inc. (Nasdaq:YHOO), a leading global Internet company, confirmed today that it has rejected a joint proposal from Microsoft Corporation and Carl Icahn for a complex restructuring of Yahoo! that would include the acquisition of Yahoo!'s search business by Microsoft.
The proposal was made on Friday evening and Yahoo! was given less than 24 hours to accept the proposal, the fundamental terms of which Microsoft and Mr. Icahn made clear they were unwilling to negotiate. After reviewing the proposal with its legal and financial advisers, Yahoo!'s Board of Directors determined that accepting the proposal is not in the best interests of its stockholders.
The Board's rejection of the proposal was based on a number of factors, including the following:
1. Yahoo!'s existing business plus its recently signed commercial agreement with Google has superior financial value and less complexity and risk than the Microsoft/Icahn proposal.
2. The Microsoft/Icahn proposal would preclude a potential sale of all of Yahoo! for a full and fair price, including a control premium
3. The major component of the overall value per share asserted by Microsoft/Icahn would be in Yahoo!'s remaining non-search businesses which would be overseen by Mr. Icahn's slate of directors, which has virtually no working knowledge of Yahoo!'s businesses.
4. The Microsoft/Icahn proposal would require the immediate replacement of the current Board and removal of the top management team at Yahoo!. The Yahoo! Board believes these moves would destabilize Yahoo! for the up to the one year it would take to gain regulatory approval for this deal.
Significantly, the Board believes Microsoft and Mr. Icahn are overstating the value their search and restructuring proposal would deliver to Yahoo! stockholders and are substantially understating the risks. Yahoo! noted that a transaction that would separate the Company's search and display businesses is an undertaking of great complexity. While the Board acknowledges that the current proposal contains a number of improvements over Microsoft's earlier proposal, the Yahoo! Board's conclusion that the current proposal is not in the best interests of stockholders is based on a number of factors, including:
¿ The revenue guarantees suggested, which are conditional and subject to reduction, are well below the search revenue that the Company is expected to generate on its own and in association with its announced commercial agreement with Google. That agreement alone is estimated to generate $250 to $450 million of incremental cash flow for the first twelve months following implementation, while allowing Yahoo! to remain a principal in paid search;
@ The success of the remaining Company is critically dependent on Microsoft's ability to effectively monetize search;
@ Microsoft/Icahn's proposed Traffic Acquisition Costs rates are below market;
@ The proposal calls for Yahoo! to sell its industry-leading algorithmic search business and its related strategic and valuable intellectual property portfolio for no incremental consideration; and
@Many of the components of the headline value that Mr. Icahn and Microsoft put forward, such as the spin-off of the Yahoo!'s Asian assets and the return of cash to stockholders, are steps that could be taken by Yahoo! on its own and the Board continues to evaluate these options.
So now lets wait for the next.