Faced with this grim prospect, Mr. Yang
and Mr. Bostock balked, cutting a deal with Icahn that they hope will keep
him happy. Robert Kotick, the Activision Blizzard CEO, will step down
from the board to make room for Icahn. Meanwhile, the board will expand
by two members, with eight members of Icahn's posse, including fellow billionaire
Mark Cuban, running for the open slots. Only one non-Icahn candidate,
Jonathan Miller, the former chief of AOL, will challenge them.
With Mr. Icahn likely to have control of three of the soon-to-be 11 board
positions, he finally has enough power to finally push for some of the moves he
wants. He made it clear in a statement, that while pleased with the deal,
it is only a means to his ends -- selling the company's Search business to
Mr. Icahn stated:
I am very pleased that
this settlement will allow me to work in partnership with Yahoo!’s Board and management team to help the Company achieve its
full potential. While I continue to believe that the sale of the whole Company
or the sale of its Search business in the right transaction must be given full
consideration, I share the view that Yahoo!’s valuable
collection of assets positions it well to continue expanding its online
leadership and enhancing returns to stockholders. I believe this is a good
outcome and that we will have a strong working relationship going forward.
Additionally, I am happy that the board has agreed in the settlement agreement
that any meaningful transaction, including the strategy in dealing with that
transaction, will be fully discussed with the entire board before any final
decision is made.
Meanwhile, Mr. Bostock and Mr. Yang are pleased as the deal may save their
necks as indicated by Mr. Icahn easing his rhetoric regarding their possible
forced departure. Mr. Bostock said, "We are gratified to have
reached this agreement, which serves the best interests of all Yahoo!
stockholders. We look forward to working productively with Carl and the
new members of the Board on continuing to improve the Company’s
performance and enhancing stockholder value. Yahoo! is a world-class company
with an extremely bright future, and collaborating together, I believe we can
help the Company achieve its ambitious goals."
Mr. Yang added, "This agreement will not only allow Yahoo! to put the
distraction of the proxy contest behind us, it will allow the Company to
continue pursuing its strategy of being the starting point for Internet users
and a must buy for advertisers. No other company in the Internet space
has our unique combination of global brand, talented employees, innovative
technologies and exceptional assets, attributes that will help us take
advantage of the large and growing opportunity ahead of us. I look forward to
working together with our new colleagues on the Board to make that happen."
It should be interesting to see how the board reacts, should Icahn push
to sell the search business after his candidates are safely in place.
In the past, Mr. Bostock and Mr. Yang have been vocally opposed to splitting
off this business unit, which the company was founded upon, insisting on a
complete transaction or none at all, and demanding a lofty price for such a
If Icahn succeeds in selling the search unit, it would be eerily reminiscent of
his victory with Motorola in a similar dispute. Like with
Yahoo-Microsoft, he initially approached Motorola hoping to depose the board
and sell the entire company. In the end the leadership at Motorola caved
to his demands, and gave him a share in the board, allowing him to sell off a
couple of the company's business units. The compromise was a victory for
Icahn, above all else, who made a tidy profit in stock. Should the
Microsoft-Yahoo deal go through, Icahn, who holds 5 percent of Yahoo's stock,
should similarly see great financial rewards.
However, if there's anything the Yahoo and Microsoft drama has taught us, it is
to expect the unexpected. So until the deal is set in stone, don't be
surprised to see more antics from the company, from Mr. Icahn, and from