Meet Carl Icahn's Yahoo (YHOO) Board: Icahn, Frank Biondi, Mark Cuban, Seven More
Cuban is among the ten directors that billionaire investor/corporate raider Icahn is proposing in his bid to unseat Yahoo's board. Other big names: Icahn himself, partner Keith Meister, and former Viacom CEO Frank Biondi, Jr., who Icahn once nominated to chop up Time Warner (TWX). Rounding out the ten: Lucian Bebcuk, John Chapple, Adam Dell, Edward Meyer, Brian Posner and Robert Shaye.
WSJ:
"It is quite obvious that Microsoft's bid of $33 per share is a superior alternative to Yahoo's prospects on a standalone basis," said Mr. Icahn. He went on to write that "it is irresponsible to hide behind management's more than overly optimistic financial forecasts," and called it "unconscionable" that the board didn't put the offer to a shareholder vote.
"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 Inc.
See Also:
Icahn To Announce Full Yahoo Board Slate, Raise Hell
Carl Icahn Gets The Old Gang Back Together Again
Carl Icahn, Comedian
Can yahoo shareholders sue Icahn if
a. MSFT doesn't agree to buy Yahoo
b. MSFT and Yahoo can not get regulatory approval but Yahoo loses most of its top engineers during this delay and therefore loses value
c. MSFT buys Yahoo but the merger proves to be a disaster and MSFT loses value (at this point ICahn may want to be on MSFT board to spin off Yahoo)
And
Can companies have a clause that a shareholder must hold the shares of at least an year before taking up activism? That will eliminate anyone who wasn't around to study the company enough to take up actions? For example, how does Icahn know what is good for Yahoo without knowing some confidential information?
Here are a couple of answers:
For "a." -- Since proxy fights are voted on by the shareholders (everyone who is a major shareholder gets a say in the Board vote), so, no. They'd only get to enjoy the regret that anyone who buys stock in a dying company is left to deal with. However, this is almost certainly what MS wanted to happen when they walked away from the deal.
And, strategically, Yahoo is MS's best choice for acquisition (and the fact that they've not made a bid for anyone else, and was choosing to wait to see what happened at the coming shareholder meeting is also quite telling).
Icahn didn't become a billionaire by making lousy bets either.
So I'd say "a." is almost certainly a nothing to worry about.
Question "b." -- The cream of the crop has already left. Yahoo's serious talent and most forward-looking execs, pulled up stakes and left town during the 2 months that MS & Yahoo were negotiating, so "b." is a non-issue.
Question "c." -- Who knows? Look at what Compaq did to HP, and what Nextel did to Sprint... Of course, almost as often, mergers & acquisitions can create real juggernauts (case & point, Google's penchant for acquiring companies that have seriously contributed to real or perceived future growth).
I'm not sure what the SEC regs are regarding shareholder rights, or whether any companies currently have similar clauses (though I doubt it, since this is simply just how the Street works. Icahn, and many others, have made billions doing this... for decades).
If YHOO does a deal with GOOG for search advertising, exactly as it said it would, and this makes MSFT move on even further, can YHOO shareholders sue Icahn for raising their hopes?
If MSFT declines to buy YHOO again, and I sell my stock then YHOO does a deal with GOOG which works lifting its stock above $33, who do I sue?
How much is that worth per share?
Dude 99% of the engineers who left were let go.
The 1% who left of their own accord - some of them rocked some of them not so much - This is just normal effing churn.
inane rubbish
Now look what you've got. You have Cuban, Icahn and Biondi all holding your shareholders hostage just as much as they are holding Yahoo hostage.
As a shareholder, Icahn is deciding for himself what he thinks best. His plan is entirely dependent on shareholder approval: if a majority of the shareholders vote to approve his plan, shareholders can't sue themselves.
Because it's entirely in the hands of shareholders it's completely different than board directors acting in their own interests rather than on behalf of shareholders.
The best chance of avoiding an Icahn disaster is hoping that it becomes very clear over the next month that Microsoft will no longer acquire Yahoo at $31-33, and the majority of shareholders vote against his slate of directors.
Dude, haven't you been reading SAI and TechCrunch, etc.??? Every week there was an announcement about one or more execs or upper-level brains that departed Yahoo for greener and more stable pastures.
Please do a little research before getting high on your horse.
"99% of the engineers who left were let go."
And your point is? I don't see how this contradicts anything I said earlier. Whether the engineers were "let go" or left with better offers is immaterial. They're gone. End of story.
At least you picked an accurate comment name. LOL Nonsense, indeed.
The severance agreements, the Google deal, etc., etc.
Yang & Co. certainly did their best to scuttle the MS buyout...
But new leadership at the company will certainly take a different route.
Mr. Icahn will extract all the value in the deal and leave a dead YHOO for MSFT to acquire. Remember that MSFT could have done the proxy fight itself, but chose not to do it because they want an alive and friendly YHOO, not a dead and hostile YHOO. Mr. Icahn is just throwing a monkey wrench which will make the deal even more expensive for MSFT and lead to loss of value on the YHOO side.
Note that YHOO is trading higher than the weekend before the deal looked like a sure thing. This implies that the market has higher expectations than what MSFT was offering back then. People are betting that either MSFT takes the bait at ~$35/share or YHOO quickly signs a long-term deal with GOOG to stay independent.
Btw, I had predicted some of this in:
http://www.alleyinsider.com/2008/4/next_move_in_the_microsoft_yahoo_battle_analysts_wall_street_and_sai_readers_place_bets
"Rav: [E]veryone is assuming that if MSFT walks, Yahoo goes under 20, with no opinions to the contrary. They don’t seem to realize that Yahoo shares now have MSFT put (similar to the Greenspan put). No one will believe that MSFT is going to walk for real and for ever. YHOO may go down 2-3 bucks, but then will attract lot of new stock buyers, because MSFT is eventually going to come back."
Now YHOO has a Icahn put in addition to MSFT put, and guess who is gonna pay the premium for those puts - MSFT.
Proxy fights are very expensive. MS actually played this like a master, and is letting Yahoo's own shareholders pay for the fight, and now MS will get Yahoo for less (minus the cost of the battle, and the inevitable run-up in the stock that would have happened, had they launched a fight right away).
I predicted the current situation, and even put my money where my mouth was... Now I've actually made a good chunk of change on it thus far, and am loving Mr. Icahn right now. :-D
But it's important to remember that Icahn isn't stupid. He won't gut Yahoo to the point that MS won't even want it. But you can be sure he'll get rid of the ego-toads that scuttled the first buyout offer.
Look at how he helped bring GM back from the dead... Yahoo is a piece of cake, compared to that cluster***k of a business. :-)
"Hey, Oli said:May. 08, 12:40 PM
"Why is the stock still rising!?? Enlighten us Henry or joeblow!"
Speculators. Much of the Street still believes a deal with MS (or someone) will happen, and they want in on a potential payout by buying stock in the mid-20's, and hoping for a buyout in the mid-30's. With most of the major shareholders talking about ousting the whole Board next month, there's a good chance that a deal with someone WILL be done too.
Simple.
Any trader worth his/her salt would try to make a play like that. I just threw some gambling $ at it myself. LOL
It's NOT a vote of confidence, if that's what you're thinking. It's a vote that everyone believes it's a sinking ship that will be acquired."
http://www.alleyinsider.com/2008/5/uh_oh_google_may_not_want_to_do_search_deal_with_yahoo_after_all
THEY drove a lot of that run-up, as they accumulated massive positions and prepared to mount the proxy battle.
This whole thing is so interesting, from a strategic perspective. A cool textbook case. :-)
Looks like your comment was after MSFT walked and was more of an explanation of what happened (a posteriori). If you look at the date of my comment, it was before MSFT walked (a priori). YHOO holding value and rising was an unexpected event for the street, with most folks expecting ~$20 price on YHOO. I had expected around $24 and rising from there, which it did.
In any case, congrats on making some $$ on it. I made some $ as well but didn't hold YHOO opts. till Mr. Icahn showed up, so left some for him :-).
If you look at the story in my comment earlier, I totally agree with you that Icahn is very smart. My claim is that he doesn't have any affinity to YHOO or MSFT. He'll just try to extract maximum value from this deal regardless of whether MSFT is still interested or not. In the process if YHOO loses value so be it.
If MSFT doesn't come back at around ~$35, I doubt that Jerry will agree to a deal. A protracted proxy fight is in no one's interest because then YHOO becomes a fast depreciating asset. But both MSFT and Jerry are still quite far in terms of expectations. So protracted proxy fight is likely. If Jerry feels threatened by this at some point he would sign deal with GOOG and try to divest YHOO's asian assets. He has nothing to lose by following that path. The short term activist shareholders will still make money, but it would be a big strategic loss for MSFT.
I think comparison of GM and YHOO is not fair, because YHOO is all about people and technology unlike GM. Perhaps a comparison with BEA and ORCL is more reasonable. In that case ORCL ended up paying a lot more for BEA after Icahn got involved. I'm sure MSFT would have to pay more in this case as well, because of Icahn's involvement. Most commentators at this point believe that MSFT is in a better negotiating position and should lower their offer from $33/share. I don't agree with this view.
But I think that Jerry won't have much of a choice the next time around. If he balks, the new board will fire him. This new board will have no love, and even less respect for him as it is, and there's a possibility that may simply remove him as a gesture of goodwill - since he already has a good degree of bad blood with MS, and is therefore not the person to conduct the talks anyway - before even restarting negotiations.
At this level (negotiating an M & A, as opposed to long-term management and vision), Icahn's expertise is superior, and a comparison with GM (or rather, one of his other straightforward M & A moves) is actually quite appropriate.
If this turns into a "long" position, Icahn will likely bring on a new CEO who is a better match for the job, i.e. someone from Tech, who is familiar with the industry & its culture -- could be why he's bringing Cuban onboard (hmmm)...
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