NEW YORK, July 7 /PRNewswire/ -- Carl Icahn today issued the following
open letter to Yahoo! shareholders.
SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER
DOCUMENTS RELATED TO THE SOLICITATION OF PROXIES BY CARL C. ICAHN AND HIS
AFFILIATES FROM THE STOCKHOLDERS OF YAHOO! INC. FOR USE AT ITS ANNUAL MEETING,
WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION,
INCLUDING INFORMATION RELATING TO THE PARTICIPANTS IN THE PROXY SOLICITATION.
WHEN COMPLETED, A DEFINITIVE PROXY STATEMENT AND A FORM OF PROXY WILL BE
MAILED TO STOCKHOLDERS OF YAHOO! INC. AND WILL ALSO BE AVAILABLE AT NO CHARGE
AT THE SECURITIES AND EXCHANGE COMMISSION'S WEBSITE AT WWW.SEC.GOV.
INFORMATION RELATING TO THE PARTICIPANTS IN THE PROXY SOLICITATION IS
CONTAINED IN THE PRELIMINARY PROXY STATEMENT ON SCHEDULE 14A THAT WAS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 26, 2008.
During the past week I have spoken frequently with Steve Ballmer, CEO of
Microsoft. Several of our conversations have lasted as long as an hour. Also,
a few of our discussions have taken place while other top executives, such as
Kevin Johnson, participated. Our talks centered on the industry in general
but, more importantly, on how Yahoo! and Microsoft can do a transaction
together. Steve made it abundantly clear that, due to his experiences with
Yahoo! during the past several months, he cannot negotiate any transaction
with the current board. His logic is simple. If and when a transaction was
consummated, Microsoft would be guaranteeing a great deal of capital at
closing. However, a transaction could take at least nine months and perhaps
longer to obtain regulatory clearance in the U.S., Europe, and elsewhere.
During that period, if the current board and management team of Yahoo!
mismanage the company (and their recent track record is far from reassuring),
Microsoft would be putting its money at risk and a great deal could be lost.
For example, in a transaction to purchase the whole company, a very large
amount of capital would be due at closing. Even in an "alternate" transaction,
where just the "Search" assets were purchased, large guarantees would have to
be made and, again, large sums could be lost if the company was mismanaged.
Microsoft perceives this risk may be quite high with the current board and
management in place. However, Steve made it clear to me that if a new board
were elected, he would be interested in discussing a major transaction with
Yahoo!, such as either a transaction to purchase the "Search" function with
large financial guarantees or, in the alternative, purchasing the whole
company. He stated that Microsoft would be willing to enter into discussion
immediately if the new board that has been nominated were elected. While there
can be no assurance of a future transaction, as many of you know, I have
negotiated successfully a large number of transactions over the past years. If
and when elected, I strongly believe that in very short order the new board
would, subject to its fiduciary duties, be presenting to shareholders either a
purchase offer for the whole company or a very attractive offer to purchase
"Search" with large guarantees. I hope to continue to be speaking to Steve
over the next few weeks; however, since I do not as yet represent the Yahoo!
board, both Steve and I do not wish to get into details over price, or even
which of these transactions makes the most sense.
Much has been said about how badly the Yahoo! board has "botched up"
negotiations with Microsoft over the past months. There is no need to keep
pointing out the mistakes I believe Yahoo! made by not immediately taking a
$33 offer made by Microsoft. But one thing is clear -- 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.
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. It is no secret that Google (which hired a great operator as CEO)
continues to dramatically outperform Yahoo!. According to publicly available
information, Google's income from operations grew 59% per year over the last
two years while Yahoo!'s shrank 21% per year. However, none of the above has
caused the Yahoo! board to hesitate in paying themselves $10,000 per week. IT
IS TIME FOR A CHANGE.
If elected, I have little doubt that the new board, subject to its
fiduciary duties, will do what the current board will not do, i.e.,
-- Immediately start negotiation with Microsoft to sell the whole company
or, in the alternative, sell "Search" with large guarantees.
