Microsoft open to restarting Yahoo talks
Microsoft has stated it would be prepared to reopen negotiations to buy Yahoo, but on the condition that a new board is elected first.
The news is a boost to investor Carl Icahn and his backers who are seeking to elect a new board at Yahoo’s stockholder meeting on 1st August.
Microsoft’s announcement is the latest twist in the protracted negotations between the two companies, which ground to a halt in May after Yahoo’s rejection of Microsoft’s $47.5 billion takeover offer.
According to an open letter from Icahn, the financier has been in regular contact with Microsoft CEO Steve Ballmer over the course of last week as he seeks to push through the deal.
“This is the first concrete confirmation we have that Microsoft is willing to come back to the table,” commented Ben Schachter of analyst UBS.
The news of Microsoft’s continuing interest has seen Yahoo shares rise 12 percent.
It gives Icahn a much stronger hand going into the shareholder vote. It significantly raises his profile and his likelihood for success.” added Schachter.
The exisiting Yahoo board, headed by CEO and founder Jerry Yang, is seen as the major stumbling block to a deal, with the suggestion that they are particularly Anti-Microsoft and have done all they can to stave of the takeover attempt - recently agreeing to an advertising deal with rivals Google.
Microsoft CEO Ballmer has spoken of his concerns that Yahoo’s leaders could sabotage efforts to agree a merger and that there was a risk of the existing board “mismanaging” Yahoo during the regulatory approval process.
Speaking at a recent conference, News Corp. chief Rupert Murdoch expressed his doubts that a deal could ever be struck between Microsoft and Yahoo.
“There won’t be a deal. There’s bad personal feelings,” said Murdoch, adding “In six months, [Microsoft] will walk away,”
If the current Yahoo management are replaced with a slate of board members more receptive to a Microsoft deal, a Yahoo-Microsoft tie-up would appear far more likely.
To help this become reality, Icahn has some influential backing among Yahoo’s investors, notably Yahoo’s largest shareholder Capital Research, who have announced they may vote against the incumbent board in a proxy fight.
Unsurprisingly, Yahoo has responded by saying that an Icahn-led takeover deal would not be in the best interests of Yahoo.
“If Microsoft and Mr. Ballmer really want to purchase Yahoo, we again invite them to make a proposal immediately,” the company stated.
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