Microsoft may revive discussions with Yahoo
Software firm would back Icahn directors
NEW YORK - Microsoft Corp. said it may revive takeover talks with Yahoo Inc., the second most popular US search engine, if investors back Carl Icahn's attempt to oust the board and chief executive Jerry Yang.
Yahoo shares rose the most since Feb. 1, when Microsoft disclosed its initial offer. The software maker said it might try to buy the search business or the whole company. Microsoft has been in talks in the past week with Icahn, the billionaire who controls about 69 million Yahoo shares.
Icahn is building momentum ahead of a Yahoo shareholder vote on his board slate next month. Icahn, who said the companies need to combine to compete with Google Inc., has already won backing from holders including T. Boone Pickens, the chairman of BP Capital LLC, and hedge fund manager John Paulson.
"Icahn's hand is greatly strengthened, and I think here will be a growing impetus from shareholders to go for Icahn," Sanford C. Bernstein's Jeff Lindsay said in an interview. "Significant disillusionment has set in with Yahoo shareholders." The New York analyst expects Yahoo shares to perform in line with the market, and doesn't own them.
Yahoo advanced $2.56 to $23.91 in Nasdaq Stock Market trading. Microsoft, the world's biggest software maker, gained 5 cents to $26.03.
There can be no assurance of a transaction, Microsoft said in an e-mailed statement yesterday. Yahoo responded by inviting Microsoft to make another proposal immediately, saying the software maker is the one that has repeatedly walked away from talks.
Yahoo "is now moving toward a precipice," Icahn, 72, said in a separate statement yesterday. "It is time for a change." He said his talks with Microsoft chief executive Steve Ballmer had lasted up to an hour and that some included executives such as Kevin Johnson, the president of the platform and services unit.
Icahn may win backing from Capital Research Global Investors, an arm of Capital Group Cos., the D: All Things Digital site reported yesterday. Fund manager Gordon Crawford told Yang last week that he might vote against Yahoo's directors, the site said, citing people familiar with the matter.
Capital Group is Yahoo's largest investor, with a stake of about 16 percent, according to data compiled by Bloomberg. Capital Research Global Investors holds about 6.5 percent. Crawford's assistant said he wasn't available to comment yesterday.
Microsoft originally offered about $44.6 billion for Yahoo, or $31 a share. Yang rejected the offer, saying the company he founded more than a decade ago is worth more because of its growth prospects and Asian operations.
Icahn aims to replace Yahoo's board with nine nominees that include himself, Dallas Mavericks basketball team owner Mark Cuban, and former Viacom Inc. chief executive Frank Biondi Jr. Yahoo's shareholder meeting is scheduled for Aug. 1. 