Microsoft plan would destroy shareholder value: Yahoo!

In a sharp letter to stockholders, Yahoo! chairman Roy Bostock and CEO Jerry Yang said that the alliance between investor Carl Icahn and Microsoft would "destroy shareholder value" with a plan that they called "stupefying".
The letter came as the battle for the internet pioneer heats up ahead of a proxy shareholder vote set for Aug 1, in which Icahn is trying to replace Yang and the entire Yahoo! board with a slate that would reach a deal to sell all or part of the company to Microsoft.

Icahn accuses the company's current leaders of botching negotiations with Microsoft which had offered to buy the company for $47.5 billion before withdrawing its offer when Yahoo! demanded a higher valuation.

Icahn and Microsoft have since joined forces to propose deals that would separate the company's search business from its other assets in a plan that Microsoft believes would enable it to better compete with Google.

But Bostock and Yang said that Icahn was ignorant about the internet business and that his proposed deal with Microsoft would meet "only their very narrow special interests."

They defended the existing board, citing initiatives planned such as "unlocking the value of our Asia assets" and saying the company remains open to "negotiating a value creating transaction (including with Microsoft) that provides real and certain value - not just the possibility of value."

"Icahn has made it clear that his only objective is to sell part or all of Yahoo! to Microsoft. That fact, combined with his lack of an operating plan going forward, means that he will have no leverage to negotiate a fair deal with Microsoft," the letter said.

"Microsoft's flip flops and inconsistencies over the past five months are so stupefying that one can only conclude that Microsoft was never fully committed to acquiring Yahoo!," the letter said.