NEW YORK - Yahoo Inc. began pressing a case to major shareholders yesterday that its board and management deserve a chance to prove they made the right move when they rejected a $47.5 billion takeover offer from Microsoft Corp.
The decision infuriated many Yahoo shareholders, prompting activist investor Carl Icahn to agitate for replacing Yahoo's nine directors and reviving negotiations with Microsoft. If he gains control of the board, Icahn intends to fire Yahoo cofounder Jerry Yang as chief executive.
Yahoo has assembled a 32-page presentation to elaborate on the points it has been emphasizing since Microsoft withdrew its bid May 3.
Investors will decide the dustup Aug. 1 at Yahoo's annual meeting. That leaves another month for the Sunnyvale, Calif., company and Icahn to disparage each other.
And with Yahoo shares sliding back toward $19.18 - their value before Microsoft's bid - Yahoo's management is facing even more pressure to end the financial malaise that triggered the takeover bid in the first place. Yahoo shares fell 67 cents yesterday to $20.66.
Icahn didn't respond to a request for comment, but he wrote on his blog last week that he would share his latest opinions on Yahoo shortly.
Yahoo argues that entrusting the company's fate to Icahn would be foolhardy because his strategy centers on resurrecting a dead deal.
Its breaking point came after Yang and Microsoft CEO Steve Ballmer couldn't agree on a price. Ballmer had orally offered $33 per share, but Yang wanted $37 - a price that Yahoo's stock hasn't reached in nearly 2 1/2 years.
Since Microsoft walked away, Yahoo has said that it tried to reopen sales negotiations, only to be told "unequivocally" that the software maker no longer is interested in buying Yahoo in its entirety.
Yahoo's shareholder presentation lists the dates of at least eight meetings that its management or other representatives held with Microsoft before the bid was withdrawn.
Yahoo also wants to raise doubts about the sincerity of Microsoft's bid, arguing that its unsolicited suitor was "unresponsive and inconsistent" during the first three months of negotiations.
"The record casts doubt on whether Microsoft was ever committed to a whole company acquisition," Yahoo asserted.
But Ballmer appeared to leave little doubt he prized Yahoo's whole franchise when he submitted his initial bid of $44.6 billion, or $31 per share. The Jan. 31 offer was 62 percent above Yahoo's stock price at the time. Microsoft made its oral offer of $47.5 billion May 2.
"This is simply revisionist history," Microsoft spokesman Frank Shaw said yesterday about Yahoo's account of events.
By relying on Google's superior technology to show some of the ads alongside its search results, Yahoo believes it can increase its annual revenue by about $800 million and generate another $250 million to $450 million in annual cash flow.