UPDATE: We now have more details on Microsoft’s latest search offer, and it seems more compelling than Yahoo indicated in its press release on Saturday.
Also, the most obvious non-starter in the proposal–the condition that Carl Icahn would get control of what was left of Yahoo–is now being disavowed by people close to Microsoft. Microsoft’s proposal has no such condition, says Microsoft.
We still have more work to do, but it now seems as though Microsoft was either used by Carl Icahn or is throwing Carl Icahn under a bus in an attempt to restart search talks. Here’s the latest…
EARLIER: Well, at least Microsoft, Yahoo, and Carl Icahn agree on one thing: Everyone else is lying:
- Yahoo says Microsoft gave it a 24-hour drop-dead ultimatum on the latest search deal.
- Microsoft and Carl Icahn say that Microsoft did nothing of the sort: Microsoft just didn’t want the negotiations to drag on forever.
- Yahoo says the deal was contingent on Yahoo management quitting and handing over control to Carl Icahn.
- Carl Icahn says that’s not true, that Carl Icahn was magnanimously willing to entertain having Jerry Yang stay on as Chief Yahoo (after booting him as CEO).
- Microsoft says its proposal did not include changes to Yahoo’s management team.
A few ramifications of this latest fusillade of press releases and accusations:
- We suspect Carl Icahn just blew up his relationship with Microsoft, possibly for good. Microsoft appears to be regretting its brief partnership with Carl Icahn.
- Tensions between Yahoo and Microsoft are at an all-time high: We just don’t see a friendly deal at a price Microsoft might be willing to pay. (Ironically, however, this latest episode may have united Yahoo and Microsoft in their hatred of Carl Icahn).
- A vote for Carl Icahn’s slate at Yahoo shareholder meeting is no longer a vote for Microsoft. It’s just a vote for Carl Icahn. After embarrassing Microsoft over the weekend with his “hand over control to Carl Icahn” demand, we suspect it will be more difficult for Carl to arrange the Hail Mary deal with Microsoft, even if he does win control (which we seriously doubt he will).
We imagine you’re as sick of reading about this soap opera as we are writing about it, so we’ll close (for today) with these predictions:
- It’s over: Carl Icahn has lost. Yahoo will win the shareholder vote
- Carl Icahn has lost.
- Yahoo will win the shareholder vote
- Maybe, at some point, a few months down the road, Microsoft and Yahoo can see if there’s some way to work together to combat the GOOG–perhaps even an acquisition. But that will be many months down the road.
On the evening of July 12, Yahoo! Inc. released a statement relating to recent discussions involving Yahoo!, Microsoft Corporation, and Carl Icahn. Microsoft believes the statement contains inaccuracies that need to be corrected. Among other things, the enhanced proposal for an alternate search transaction that we submitted late Friday was submitted at the request of Yahoo! Chairman Roy Bostock as a result of apparent attempts by Mr. Icahn to have Microsoft and Yahoo! engage on a search transaction on terms Mr. Icahn believed Microsoft would be willing to accept and which Microsoft understands Mr. Icahn had discussed with Yahoo!.
Specifically, on Thursday afternoon, July 10, Mr. Bostock called Steve Ballmer’s office to arrange a call. On that subsequent call, Mr. Bostock told Mr. Ballmer that “with substantial guarantees on the table and an increase in the TAC (traffic acquisition cost) rate, there are the pillars of a search only deal to be done.” Mr. Bostock encouraged Mr. Ballmer to submit a new proposal to Yahoo! for a search only deal reflecting these terms.
After considering Yahoo’s request and taking into account Yahoo’s previous feedback about our prior search proposal, Microsoft determined late Friday to propose an enhanced search transaction. This proposal included significant revenue guarantees, higher TAC rates, an equity investment and an option for Yahoo! to extend the agreement over a 10 year period.
Microsoft’s proposal did not include changes to Yahoo’s governance.
At the time Microsoft submitted its enhanced proposal, Microsoft asked that Yahoo! confirm whether it would agree that the enhancements were sufficient to form the basis for the parties to engage in negotiations over the weekend on a letter of intent and more detailed term sheets. This discussion has been mischaracterized as a take it or leave it ultimatum, rather than a timetable in order to move forward to intensive negotiations. Yahoo! informed Microsoft on Saturday that it had rejected the proposal.
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