Billionaire financier Carl Icahn yesterday finally convinced Microsoft chief Steve Ballmer to publicly support his campaign to oust the board of Internet icon Yahoo!
The question now is whether Yahoo!’s shareholders, who have watched the stock fluctuate wildly during the company’s seven-month courtship of Microsoft, are willing to throw their weight behind Icahn in the hope he can sell the company at a premium.
Investors are concerned that while Icahn may be successful in unseating the board, he’ll fail to sell Yahoo! at a decent price. Sources close to Icahn said he now supports selling Yahoo!’s search business to Microsoft for $1 billion as long as it includes guarantees that Yahoo! will be paid a minimum amount based on the search engine’s revenue.
Investors pushed up shares of Yahoo! by 12 percent yesterday to $23.91 after Icahn said Ballmer is willing to take another look at Yahoo! if a new board is installed.
“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,” Icahn said in a letter to shareholders yesterday morning.
Microsoft quickly followed with its own statement confirming the contents of Icahn’s letter.
But several big shareholders remain unconvinced that Ballmer will indeed buy the whole company and fear a search deal won’t be worth much if the remaining company has no leader.
Icahn has put up a slate of nine directors to replace Yahoo!’s current board and throw out chief Jerry Yang at an annual meeting scheduled for Aug. 1.
“Ballmer has said many times that he is no longer interested in buying all of Yahoo!, but now all of a sudden he’s changed his mind,” said one Yahoo! shareholder. “I just don’t get it.”
Said another investor: “Shareholders risk being left with an even more rudderless ship than we have now.”
Icahn took issue with that view yesterday.
“If you are a shareholder, why wouldn’t you believe that I would put a good CEO in there if I got control of the board,” he told The Post. “My record shows that I’ve done that a number of times with good results.”
Still, some analysts questioned whether Icahn can find a capable chief executive if his strategy is only to sell the company to Microsoft.
“If Microsoft wanted to buy Yahoo!, they would have bought it by now. Clearly at this point they just want to steal the search business and they are trying to use Carl Icahn to do it,” said a source close to Yahoo!