Yahoo and Icahn settle board dispute, Microsoft still lurks
This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.
Yahoo and Carl Icahn this morning announced they had settled their dispute over the makeup of the company’s board, striking a compromise that will give the dissident investor and his allies three of the board’s 11 seats.
The move ends a showdown that had been slated for Yahoo’s annual meeting Aug. 1, when shareholders would have voted on a rival slate of board members proposed by Icahn. He had vowed to pursue a sale of Yahoo to Microsoft. Under the agreement, Yahoo co-founder Jerry Yang will remain chief executive and Roy Bostock will remain board chairman.
‘This agreement will not only allow Yahoo to put the distraction of the proxy contest behind us, it will allow the company to continue pursuing its strategy of being the starting point for Internet users and a must buy for advertisers,’ Yang said.
Icahn also praised the compromise, which will put him on an expanded 11-member board, along with two others from a pool of nine that he will recommend. In a written statement released by Yahoo, Icahn said:
I am very pleased that this settlement will allow me to work in partnership with Yahoo’s board and management team to help the company achieve its full potential. While I continue 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, I share the view that Yahoo’s valuable collection of assets positions it well to continue expanding its online leadership and enhancing returns to stockholders.
Robert Kotick, chief executive of video-game publisher Activision Blizzard, will step down from the board, Yahoo said. The other directors will keep their jobs, including Bostock, Yang, Ronald Burkle, Eric Hippeau, Vyomesh Joshi, Arthur Kern, Mary Agnes Wilderotter and Gary Wilson.
While the compromise ends the board dispute, it does not resolve the broader issue of whether Yahoo will negotiate a sale to Microsoft.
Scott Kessler and Jim Yin, information technology analysts with Standard & Poor’s Equity Research, said in separate notes to investors this morning that they believe a deal for Microsoft to buy Yahoo’s search business or the entire company is ‘less likely’ after the compromise. Kessler recommended that investors hold on to Yahoo shares, and Yin recommended that his clients buy Microsoft share as the company ‘will aggressively build its online service business through smaller acquisitions and organic growth.’
Kessler said today’s announcement came amid evidence that Yahoo’s board was gaining momentum and Icahn losing it as the dispute headed for the annual meeting. On Friday, Legg Mason’s Bill Miller, who controls 4.4% of Yahoo’s stock, became the first major institutional investor to say he would vote to keep the current board in place.
Benjamin Schachter, an analyst with UBS Investment Research, didn’t rule out a future deal. But he said in a research note that with the proxy battle behind Yahoo, ‘today’s announcement will enable more focus on operational execution, while still being open to possible transactions.’
-- Jim Puzzanghera
Puzzanghera, a Times staff writer, covers tech and media policy from Washington.