Microsoft Denies Yahoo Version of Failed Talks

Microsoft today described its own version of events concerning Friday's failed talks with Yahoo's management, which were focused on a renewed effort to buy Yahoo's search ad business.

Microsoft had submitted an "enhanced proposal," it said, after corporate raider and Yahoo investor Carl Icahn had discussed the matter with both Microsoft's management and Yahoo Chairman Roy Bostock.

The enhanced proposal contained "significant revenue guarantees, higher TAC [traffic acquisition cost] rates, an equity investment and an option for Yahoo! to end the agreement over a 10-year period," according to an announcement issued by Microsoft.

Icahn's statement on the matter described a complex scenario that would involve Microsoft committing $7.7 billion toward buying Yahoo's search business, with shareholders getting "$16.25 per share in distributions."

If that deal was ever OK with Bostock, he didn't indicate it as such. Instead, Bostock characterized Microsoft's renewed bid as "erratic and unpredictable behavior."

Yahoo said it had been given 24 hours on Friday to decide on the enhanced proposal. However, Microsoft's announcement disputed that characterization, saying it just was asking for a "letter of intent and more detailed term sheets."

Microsoft also disputed that it wanted to change Yahoo's "governance," although Microsoft's CEO Steve Ballmer has said that it can't work with the current Yahoo board. Icahn's announcement stated that Microsoft and he "were willing to discuss keeping a number of the current board members and Jerry Yang as Chief Yahoo!"

However, Icahn himself has been actively trying to replace Yahoo's board with his own slate of candidates, since all of Yahoo's board members can be replaced when shareholders vote on Aug. 1. Icahn also has been publicly critical of Yahoo's management for not accepting Microsoft's original bid -- then valued at $44.6 billion -- for the whole company.

Microsoft's explanation of events led stock observer Henry Blodget to speculate that "Carl Icahn has lost" and that "Yahoo will win the shareholder vote."  

About the Author

Kurt Mackie is senior news producer for 1105 Media's Converge360 group.


  • The 2021 Microsoft Product Roadmap

    From Windows 10X to the next generation of Microsoft's application server products, here are the product milestones coming down the pipeline in 2021.

  • After High-Profile Attacks, Biden Calls for Better Software Security

    Recent high-profile security attacks have prompted the Biden administration to issue an executive order aiming to tighten software security practices across the board.

  • With Hybrid Networks on Rise, Microsoft Touts Zero Trust Security

    Hybrid networks, which combine use of cloud services with on-premises software, require a "zero trust" security approach, Microsoft said this week.

  • Feds Advise Orgs on How To Block Ransomware Amid Colonial Pipeline Attack

    A recent ransomware attack on a U.S. fuel pipeline company has put a spotlight on how "critical infrastructure" organizations can prevent similar attacks.