Yahoo shares up on hope of talks, Google deal
NEW YORK (Reuters) - Yahoo Inc investors latched on to hopes the company would resume talks with Microsoft Corp or soon forge a deal with Google Inc, sending shares up 6 percent on Tuesday.
Investors are anticipating that Yahoo may give in to pressure from its largest shareholders to reconsider Microsoft's $47.5 billion offer, and noted conciliatory comments from its chief executive, Jerry Yang.
Alternately, Yahoo could strike a pact to outsource some of its search listings to Google to boost its performance. The two are hammering out the details of a potential deal and sharing their plans with antitrust regulators, said a person close to Google.
"There are definitely big accounts stepping in and buying Yahoo on the assumption they will get back to the table," said RBC Capital Markets analyst Ross Sandler. "If they don't, you have one other out, which is the Google outsourcing (deal)."
Yahoo Chief Executive Jerry Yang told Reuters on Monday that he had "mixed feelings" about events over the weekend, when talks broke down, and was still open to negotiations.
"If they have anything new to say, we would be open," he said. "I am more than willing to listen."
Microsoft had sweetened its offer to $33 per share, but walked away from talks on Saturday after Yang held out for a price of $37 per share.
Yang's softer stance came as two of Yahoo's largest shareholders told The New York Times they would have been happy with a deal at $34 per share.
"I am extremely angry at Jerry Yang and at the so-called independent board," Gordon Crawford, portfolio manager for Capital Research Global Investors, the largest Yahoo shareholder with some 16 percent of stock, told the newspaper.
Crawford's sway over media companies is legend. In 2002, he mounted a campaign to force the resignation of AOL Time Warner Chairman Steve Case, the architect behind one of the worst corporate mergers of its era. Case resigned in January 2003.
Bill Miller of Legg Mason Inc, which owns about 7 percent of Yahoo shares, said he was disappointed the two companies didn't reach a deal and was surprised Microsoft walked away.
DEADLINE FOR PROXY FIGHT
In an apparent effort to contain a shareholder revolt, Yahoo on Monday set its annual meeting for July 3. It said May 15 is the deadline to nominate board candidates, giving dissident investors just over a week to launch a proxy fight.
"If you lose the goodwill of some of the largest shareholders, which seems to have happened, we would expect a bloodless coup with Jerry being invited to step aside," said Sanford C. Bernstein analyst Jeffrey Lindsay.
Yahoo shares rose $1.49 cents to $25.86, partially recovering from a 15 percent drop on Monday. Microsoft rose 1.6 percent to $29.54. Continued...
