| NEW YORK
NEW YORK Billionaire investor Carl Icahn is
moving ahead with plans to run a dissident board slate at Yahoo
Inc (YHOO.O) in a bid to force the Internet company to sell
itself Microsoft Corp, sources familiar with the matter told
Reuters on Wednesday.
Icahn, who has amassed a large stake in the Internet
company over the last week, has lined up at least 12 potential
board candidates and could announce the slate as early as
Wednesday night, the sources said. The deadline for nominating
a dissident slate is Thursday for the July 3 annual meeting.
Frank Biondi, a veteran media executive and former head of
Viacom Inc VIAb.N who has worked with Icahn on activist
campaigns at Time Warner Inc (TWX.N) and Motorola Inc MOT.N,
has agreed to be a nominee, sources said.
Big Yahoo investors have publicly chastised the company for
failing to seal a buyout deal with Microsoft (MSFT.O), which
abruptly ended talks earlier this month after balking at
Yahoo's $37 per share asking price.
Microsoft, which offered a sweetened bid of $33 per share,
or $47.5 billion, has given no indication that it would revive
the talks, whether or not a new slate is elected, posing a
significant risk to Icahn's plans.
Since Microsoft dropped its offer, Microsoft executives
have reaffirmed publicly they are no longer interested in
pursuing Yahoo. On Wednesday, Microsoft declined comment.
Ryan Jacob, portfolio manager of the Jacob Internet Fund,
which holds around 150,000 Yahoo shares, said Icahn will
probably prevail in his effort to win board seats.
"There's a reasonable chance that Icahn can be successful,"
said Jacob. "There's a lot of shareholder unhappiness right
now, including ours. It's encouraging because there's the
chance that they can be more successful in consummating a
transaction with Microsoft."
It was unclear if Icahn plans to run a full slate of ten
new directors at Yahoo, or a "short slate," or non-control
position. The details have yet to be worked out, sources said.
In previous proxy battles, Icahn has nominated a large
slate and settled for a smaller slate after negotiations with
the company. In a battle with Motorola Inc MOT.N this year,
Icahn put forth a slate with four nominees, but ultimately
settled with the company for two board seats.
Icahn reached out to virtually all the candidates on a
Microsoft-sponsored board slate that the software company
withdrew this month, sources said.
The candidates included Ross Levinsohn, the former head of
News Corp's NWSa.N Fox Interactive Media Group and now
partner in buyout firm Velocity Interactive Group, sources
One industry expert said Icahn would likely have a better
chance with a minority board slate, since it is unlikely that
investors would allow a complete takeover of the board and the
attendant uncertainty that such a move would have at Yahoo.
"It's handing the company over to an entirely different
team," said Bruce Goldfarb, partner in Okapi Partners, a proxy
advisory firm. "While a dissident slate would obviously have a
mandate to sell the company, investors just don't give up
control without a premium. If Microsoft was on board, he'd have
The move on Yahoo is the latest of a number of proxy
battles that Icahn, whose net worth is estimated at $14.5
billion, has recently waged. Last month, there was the
settlement with Motorola and earlier this month, he nominated
three candidates to the board of biotech company Biogen Idec
Hedge fund managers had mixed views about the Icahn move.
"You can't lose," said one manager at a multibillion-dollar
activist hedge fund approvingly. "The only thing you don't
know: if you deliver the company to (Microsoft CEO Steve)
Ballmer, does he take the deal?"
Another had less-than-kind words about Icahn. "Don't mix
good governance with Carl Icahn. This is not about governance.
It's about a quick buck."
Representatives of Yahoo also declined to comment.
(Additional reporting by Robert MacMillan, Michelle
Gershberg in New York; Dai Wakabayashi in Seattle; Eric Auchard
in San Francisco; and Murali Anantharaman in Boston; Editing by