Bad blood boils after Yahoo rejects latest offer

The latest proposal is the most recent chapter in a six-month saga that started with Yahoo rejecting Microsoft's $31-per-share buyout offer. Microsoft then raised its offer to $33 per share, or $47.5bn, before pulling that bid in May. Yahoo - and Yang's fate - were Topic A at last week's Allen & Company's annual conference, as rival moguls gossiped about whether Yahoo would end up in the hands of Microsoft. 'There won't be a deal. There are bad personal feelings,' proclaimed Rupert Murdoch of the News Corporation. He predicted that in six months, 'Microsoft will walk away'. News Corp has reportedly been on the sidelines of recent discussions involving Yahoo. According to a report on the IoL site, shortly after Microsoft offered to take over Yahoo, News Corp held talks with Yahoo to combine its popular MySpace Internet social network with Yahoo and separately discussed a possible deal with Microsoft to take over Yahoo. Murdoch said one of Yahoo's biggest investors Capital Research, whose portfolio manager and legendary media insider Gordon Crawford publicly chastised Yahoo for failing to secure a Microsoft deal, would have gladly settled for a buyout at $33 per share. The New York Times reports that few of the delegates at the conference were aware that Icahn had been conducting an extraordinary round of secret negotiations with Steve Ballmer, Microsoft CEO, the result of which was yet another Microsoft offer for Yahoo. Full report on the IoL site Full report in The News York Times

Yahoo said it received the joint proposal from Microsoft and Icahn on Friday evening and was given less than 24 hours to accept. The company said the 'take it or leave it' deal that was offered would also preclude a potential sale of all of Yahoo 'for a full and fair price, including a control premium'. 'This odd and opportunistic alliance of Microsoft and Carl Icahn has anything but the interests of Yahoo's stockholders in mind,' Yahoo chairperson Roy Bostock said. According to a report on the News24 site, Microsoft said it no longer wants to negotiate with Yang's team, but that it is willing to resume talks if a new management is in place on August 1. Meanwhile, Microsoft released a statement accusing Yahoo of misrepresenting its latest offer. Yahoo had asserted that Microsoft's latest proposal was contingent on the removal of its top management and the board of directors - a fact Microsoft denied. Microsoft also said it never issued a 'take it or leave it' ultimatum. Mercury News reports that the duelling statements illustrate how frayed the relationship between the two companies has become as they struggle to hammer out a deal before Yahoo's annual meeting. The Guardian reports that Icahn subsequently blasted Yahoo for rejecting his joint proposal with Microsoft, saying management was more focused on who would run the Internet company than on the details of the offer. In a letter to Yahoo shareholders, Icahn detailed the terms of their proposal, including a $7.7bn commitment from Microsoft that consisted of $1bn for Yahoo's search business, a $3.9bn tender offer to Yahoo shareholders, and a $2.8bn loan. 'Over the years I have attempted to make changes at many companies but I have yet to see a company distort, omit and twist events and facts in the manner that Yahoo has done in their press release issued Saturday night, July 12th,' Icahn said. Full report on the News24 site Full Mercury News report Full report in The Guardian

Icahn is seeking control of the Yahoo board and will run a slate of nine dissident directors, according to his definitive proxy, filed Monday with the Securities and Exchange Commission. Icahn's announcement finally answers the question that has left investors wondering whether he would try to oust Yahoo's entire board to have greater control over the company's direction and striking a deal with Microsoft, or go after only a few seats to serve as a cattle prod. By filing a slate of nine dissident directors, Icahn is seeking to replace Yahoo's entire board. CNET News reports that Icahn's goal is to ensure that the next time Microsoft or any other suitor comes knocking that the path to a buyout will have far fewer potholes in the road. Full CNET News report