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Good old-fashioned activism went global long ago. Now it has gone virtual. CNET, the technology-focused online news provider under attack from activist investors, sold out to CBS on Thursday. On the same day, Carl Icahn launched a proxy fight against the internet group Yahoo. The veteran raider will certainly put on an entertaining show. Does he also have a chance of forcing the internet group into the hands of Microsoft?
Yes. Many Yahoo shareholders were rightly infuriated at the company’s refusal to sell to Microsoft at $33 a share – a 74 per cent premium. The software group itself balked at launching a proxy fight. Mr Icahn – who has bought the equivalent of 4.3 per cent of the company and has the support of Paulson & Co with 3.6 per cent – is doing Microsoft’s dirty work instead by proposing 10 directors to replace the board.
Investors would be mad to elect the whole slate. The likes of Lucian Bebchuk, the Harvard Law School professor, Frank Biondi, the rent-a-proxy media veteran, and Mark Cuban, the maverick entrepreneur, are credible in their own right. But they hardly look like the dream team to guide a difficult turnround of Yahoo as an independent company. If elected, they would have one mandate: to sell the business. Microsoft would love that negotiating position.
A more credible outcome is that, by keeping the pressure on chief executive Jerry Yang and the Yahoo board, Mr Icahn forces them back into negotiations with Microsoft. If that does not work, Yahoo shareholders might be willing to elect a couple of Mr Icahn’s board candidates to continue to agitate for a deal without destabilising the business entirely.
Microsoft still needs Yahoo to compete with Google. Yahoo, in turn, could do with Microsoft’s deep pockets and technology expertise. With logic on his side, Mr Icahn has a shot at victory.
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