Microsoft meets Carl Icahn to discuss Yahoo takeover deal

Jemima Kiss
guardian.co.uk, Monday July 7 2008 15.22 BST

Corporate raider Carl Icahn. Photograph: Michael Nagle/Getty Images

Key Yahoo investor Carl Icahn is in talks with Microsoft. Photograph: Michael Nagle/Getty

Microsoft confirmed today that it has met with key Yahoo investor Carl Icahn to discuss a deal to renew its takeover offer for the company and oust co-founder Jerry Yang.

In a lengthy letter to Yahoo shareholders, Icahn sought to reassure both Microsoft and Yahoo shareholders about the financial benefit of a deal, and said he wanted Yahoo to "move expeditiously to replace Jerry Yang with a new chief executive".

"Jerry Yang and the current board of Yahoo will not be able to 'botch up' a negotiation with Microsoft again, simply because they will not have the opportunity," Icahn wrote, adding that he intends to continue to meet with Microsoft chief executive Steve Ballmer in the next few weeks to discuss the deal.

"Our company is now moving toward a precipice. It is currently losing market share in its 'search' function; our current board has failed to bring in a talented and experienced CEO to replace Jerry Yang and return Jerry to his role as Chief Yahoo!, and currently it is witnessing a meaningful exodus of talent."

Icahn has proposed a rival slate of directors for Yahoo and is pushing for shareholders to vote in the new board at the company's annual shareholder meeting on August 1.

Microsoft said that it would be interested in discussing a new transaction with Yahoo if the current board is replaced and welcomed Icahn's intervention.

"While of course there can be no assurance of a future transaction, we will be prepared to enter into discussions immediately after Yahoo's shareholder meeting if a new board is elected," said the company in a statement.

It added that it is too early to discuss a likely price for the deal but reasserted its view that a deal with Microsoft, in contrast to the recent controversial search advertising deal between Yahoo and Google, would deliver "superior value to Yahoo's shareholders and the marketplace as a whole".

Yahoo is also reported to have renewed talks with Time Warner over a joint deal, according to the Wall Street Journal, although Yahoo's share price has declined sharply since the two firms last talked in April.

Yahoo's stock is currently valued at $32.19bn, of which Carl Icahn owns shares valued at $2.5bn.

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