Icahn Launches Yahoo Proxy Battle

Mega-investor Carl Icahn is unhappy Yahoo didn't accept Microsoft's takeover offer...and is launching an effort to replace Yahoo's board and make the deal.

Billionaire American financier Carl Icahn isn’t pleased that Yahoo didn’t accept Microsoft’s unsolicited offer to buy the company, even after a protracted and surprisingly public courtship dance. He’s so upset, in fact, that he’s sent a letter to Yahoo’s chairman Roy Bostock that he has formed a 10-member group that he hopes to install on Yahoo’s board of directors, who will in turn push the company to accept a Microsoft takeover at $33 per share.

Icahn also says he has acquired 59 million shares of the company, is seeking antitrust approval from the FTC to acquire another $2.5 billion in Yahoo stock.

“It is clear to me that the board of directors of Yahoo has acted irrationally and lost the faith of shareholders and Microsoft,” Icahn wrote.

If Yahoo were to accept Microsoft’s initially $33 per share offer, it might represent something of a letdown to some investors. During the last phase of negotiations, Microsoft offered $35 per share for Yahoo, but the company wouldn’t accept an offer below $37 per share. However, considering Microsoft walked away from the deal, Yahoo investors may very well consider accepting $33 per share, rather than retaining their stock and hoping Yahoo CEO Jerry Yang’s plan to ramp up the company’s revenue bears fruit.

Icahn’s nominees for Yahoo’s board include Dallas Mavericks and HDNet owner Mark Cuban and former Viacom leader Frank Biondi, along with Harvard law professor Lucian Bebchuk.

Yahoo has announced its annual shareholder meeting will be held July 3, 2008; nominations to Yahoo’s board must be submitted before close of business today, May 15, 2008.