Icahn continues battle against board

Mogul rallies shareholders for Microsoft deal

The war of words over Microsoft’s latest bid for Yahoo’s search biz continued on Monday, with investor Carl Icahn and Microsoft refuting claims Yahoo made over the weekend.

Icahn, a Yahoo investor who joined Microsoft in the failed bid, and Microsoft both denied that the tech giant gave Yahoo a 24-hour ultimatum to accept the deal as written. They both insist it was not conditional upon the immediate ouster of Yahoo management. Yahoo cited both those terms when rejecting the deal on Saturday.

Icahn, who would have gained control of Yahoo’s nonsearch biz under the deal, harshly rebuked the Netco in a letter to shareholders; Microsoft adopted a more matter-of-fact tone, leaving the inflammatory rhetoric to the professional agitator.

“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 in the manner that Yahoo has done in their press release issued Saturday night, July 12,” Icahn charged.

Icahn said Yahoo was offered more time to consider the complex transaction “if they would be willing to postpone the annual meeting for a short period.”

Icahn has been campaigning for the removal of Yahoo’s current board at the Aug. 1 shareholder meeting. On Monday, he filed his proxy statement, officially nominating nine directors, most of them previously named as potential candidates. They include Icahn, Frank Biondi Jr., Mark Cuban, venture capitalist Adam Dell and Harvard law professor Lucian A. Bebchuk. Former New Line co-topper Bob Shaye, who had been on the preliminary list, is not listed on the proxy.

Icahn also refuted Yahoo’s “innuendo” that he has forged an “odd and opportunistic” alliance with Microsoft. “That is patently ridiculous,” he wrote in a line evoking Yahoo’s weekend claim that Microsoft’s latest offer was ludicrous.

For its part, Microsoft simply said that the Yahoo statement “contains inaccuracies that need to be corrected.” The tech giant described the latest rejected bid as an outgrowth of talks between Icahn and Yahoo chair Roy Bostock. It said the proposal did not include changes to Yahoo’s governance, and that Yahoo mischaracterized discussions of a timetable to move talks forward as a take-it-or-leave-it ultimatum.

Yahoo, meanwhile, issued another shareholder slideshow outlining the merits of the Microsoft/Icahn proposal. Netco used a similar tactic to defend its decision to spurn Microsoft’s first bid for its search biz.

The latest shareholder filing pointed out that Microsoft’s $2.3 billion annual guarantee for search revenue is subject to certain Yahoo performance metrics that will be affected by Microsoft performance. And it called Microsoft’s claim that Yahoo would achieve annual cost savings between $1.1 billion and $1.6 billion as unrealistic, projecting it to be not more than $750 million of direct cash cost savings.

More posturing for shareholders’ sake is expected in the lead up to the shareholder meeting on Aug. 1. Microsoft will issue its next earnings report later this week, to be followed by Yahoo next week.

Yahoo’s stock dropped 4.24% to finish the day’s trading at $22.57. Microsoft shares edged down 0.4% to finish the day at $25.15.

Meanwhile, the exec drain continues at Yahoo: On Monday, word leaked out that Karin Gilford, the Netco’s No. 2 entertainment exec, is departing for Comcast. Yahoo’s VP and general manager of entertainment recently developed its popular OMG showbiz news site.

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