San Francisco — Yahoo Inc. CEO Jerry Yang and Chairman Roy Bostock, on Wednesday sent a letter to stockholders in the company defending its alliance with Google and whopping out at Carl Icahn’s campaign to install a Microsoft-friendly board of directors.
In a letter to stockholders, Yahoo explained that the search advertising pact it signed with Google earlier this month was “financially attractive” and struck the right strategic balance, and said the deal would do more for stockholder value than Microsoft’s search-only hybrid proposal which was made after Microsoft withdrew its original $47 billion take-over bid for Yahoo in May.
Microsoft, at a meeting on June 8, told Yahoo that it was not anymore interest in buying Yahoo, even at the earlier price of $33 per share. Although, Microsoft responded with an offer to buy just Yahoo’s search business for $1 billion and a share of future search ad revenue.
Later, Sunnyvale-based Yahoo signed an agreement with Mountain View-based Google Inc. that could bring in $250 million to $450 million over 12 months, the letter said. With this deal, some of Google’s paid-for search placement ads will appear by Yahoo searches, and Google will pay some portion of the money it makes from them to Yahoo.
The letter further gave details that the Microsoft search business deal — though it would have meant an $8 billion investment in Yahoo — would have tied Yahoo to Microsoft for 10 years and would have given Microsoft veto rights over certain Yahoo actions. The Google deal was better for the company, Yang and Bostock said.
Upset by the board of bungling takeover talks with Microsoft; activist investor Carl Icahn is trying to replace the board with members whose mandate would be to get the struggling Internet pioneer into a tie-up with the US software giant, hence nominated nine candidates to replace Yahoo’s current directors, including Yang. If Icahn prevails, he also plans to fire Yang as CEO.
Meanwhile, Yahoo is urging shareholders to reject Icahn’s slate and give Yang another chance to prove the company is worth more than $47.5 billion.
“This carefully prepared agreement strikes the right strategic balance, enhancing our financial results while advancing our strategic objectives,” Yang and Yahoo Chairman Roy Bostock wrote Wednesday.
“You can decide to vote for a slate of nominees with no articulated plan for the future of Yahoo,” board Chairman Roy Bostock and chief executive Jerry Yang said in the letter.
“Or you can select to vote for your existing board of directors which has the independence, experience, knowledge and commitment to navigate the company through the rapidly-changing Internet environment, execute on our strategic objectives and deliver value for Yahoo and its stockholders.”
“Icahn did not return a call seeking comment Wednesday.”
Microsoft did not immediately reply to a request for comment Wednesday. The software maker has earlier said it remains available to discuss a limited deal with Yahoo while emphasizing it is no longer interested in buying the company in its entirety.
Yahoo shares shed 26 cents in Wednesday’s extended trading after dipping three cents to finish the regular session at $22.01 for a cumulative drop of 16 percent since the Google partnership was announced.