Yahoo! Inc. (Nasdaq:YHOO) just took away any near-term embedded call option in its stock. The company has reached an agreement with Carl Icahn to settle their pending proxy contest related to the annual meeting, but this is really a partial settlement that looks muted rather than anything made of substantial shareholder benefits. While many of the proxy fight questions have just been answered, this is a "go it alone strategy" for Yahoo! and should take away any immediate likelihood that this company will be acquired in any meaningful way.
Eight members of Yahoo!’s current Board of Directors will stand for re-election at the 2008 annual meeting: Roy Bostock, Ronald Burkle, Eric Hippeau, Vyomesh Joshi, Arthur Kern, Mary Agnes Wilderotter, Gary Wilson and Jerry Yang. Robert Kotick will not stand for re-election to the Board at the 2008 annual meeting. The Yahoo! Board will be expanded to 11 members and Carl Icahn will be appointed to the Board, with two of the additional seats to be from Icahn’s panel of nominees previously offered and Jonathan Miller (partner in Velocity Interactive Group and former AOL Chairman/CEO).
Icahn owns an aggregate of 68,786,320 shares, or 4.98% of Yahoo! common stock and he has
agreed to withdraw his nominees for consideration at the annual meeting and to vote his Yahoo! shares in support of the Board’s nominees. Icahn also said he continues to believe that the sale of the whole company or the sale of its Search business in the right transaction must be given full consideration, but it also sounds like this is going to greatly mute Icahn in his public fight against the company. This capitulation is a likely sign that Icahn didn’t have the proper votes for a total coup and it also lets the company continue ahead on its current path.
Yahoo! stock is down marginally by almost 2% in pre-market trading at $22.00. The chances of anything coming close to $30.00 in the near-term seems farther and farther away.
Jon C. Ogg
July 21, 2008
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