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Yahoo Says No to Search Buyout, Restructuring Proposal by Microsoft, Icahn

Yahoo has rejected yet another offer from both Microsoft and Carl Icahn. On Friday, Microsoft offered to buy its search business if CEO Jerry Yang and his board were replaced by Carl Icahn and directors of his choice.

Yahoo chairman Roy Bostock called the proposal an “odd and opportunistic alliance” between Microsoft and Icahn. “We will not be bludgeoned into a transaction that is not in the best interests of our stockholders,” he said (via MarketingVOX).

More from Yahoo’s rejection:

Yahoo! was given less than 24 hours to accept the proposal [made Friday evening], the fundamental terms of which Microsoft and Mr. Icahn made clear they were unwilling to negotiate.

[…]

The Board’s rejection … was based on a number of factors, including the following:

1. Yahoo!‘s existing business plus its recently signed commercial agreement with Google has superior financial value and less complexity and risk than the Microsoft/Icahn proposal.

2. The Microsoft/Icahn proposal would preclude a potential sale of all of Yahoo! for a full and fair price, including a control premium.

3. The major component of the overall value per share asserted by Microsoft/Icahn would be in Yahoo!‘s remaining non-search businesses which would be overseen by Mr. Icahn’s slate of directors, which has virtually no working knowledge of Yahoo!‘s businesses.

4. The Microsoft/Icahn proposal would require the immediate replacement of the current Board and removal of the top management team at Yahoo!. The Yahoo! Board believes these moves would destabilize Yahoo! for the up to the one year it would take to gain regulatory approval for this deal.

According to The Wall Street Journal, Yahoo offered to sell Microsoft the entire company for $33 per share, or negotiate a better deal for just its search business. Microsoft rejected both options.

Icahn’s perspective on the situation was different — and just as bull-headed. Arguing Yahoo’s board would rather “watch the ship go down … than sell the company,” he claimed, “I delivered everything they wanted but at the end they still didn’t want to do a deal.”

Last month Icahn launched a corporate rant blog which purportedly took subtle jabs at Yahoo’s management. The website issued a press release (pdf) that includes a letter to fellow Yahoo shareholders.