Yahoo Might Offer Carl Icahn Two Seats–But, Uh-Oh, He Wants Four
Yahoo leadership, trying to stave off a major clash at its annual meeting on Aug. 1 with activist investor Carl Icahn (pictured here), is contemplating offering him two board seats to assuage him, said several sources close to the situation.
The problem? Icahn, who has put up his own new slate of directors to replace Yahoo’s entire current board as part of a proxy fight, wants at least four, sources said.
While Icahn has publicly been lambasting Yahoo’s leadership since he made his investments in the company, getting a larger number of board seats might still give him enough power to make significant changes at the company, including removing CEO Jerry Yang.
Icahn has repeatedly said he intends to replace Yang and other Yahoo execs, if he gains power, and also offer Yahoo (YHOO) for sale to Microsoft (MSFT).
Nonetheless, both Icahn and Yahoo are not eager for a full-scale media circus that would surely be the result of a clash at the meeting, which–in turn–would further depress Yahoo’s already swooning stock.
Its shares have been flirting with declining lower than $20 a share for the past week–in fact, shares did that for a period of one day earlier in the week.
And both sides fear a more permanent fall to the mid-teens, as investors become disenchanted with the continuing turmoil there.
Thus, a spate of hush-hush, third-party, what-do-you-think-if communications between and among the various players in the saga–including Yahoo’s board, its top execs, major shareholders, Icahn and, of course, Microsoft.
It was the software giant that set this whole convoluted mess in motion, when it made a hostile takeover bid for Yahoo in February.
Since then, both sides then fumbled their way to a non-deal in the ensuing months, with everyone looking worse for the wear.
Microsoft is considering a proposal to take over Yahoo’s search and search-ad business, even as Yahoo flounders about at making other deals.
So, the drama continues, as all the major Web players–including News Corp. (NWS) and Time Warner’s (TWX) AOL unit–continue to try to figure out various scenarios to merge with each other or buy off various parts or, well, whatever.
For example, as BoomTown reported on Monday and Silicon Alley Insider on Tuesday (and The Wall Street Journal finally reported today), both Yahoo and Microsoft have been talking with AOL about a possible hook-up, a deal that both have entertained in the past many times.
But all these deals are complex and problematic, to say nothing of having to make them work after they are struck.
Which is why it is imperative that Yahoo finds a way to turn down the heat that Icahn might generate in the weeks to come, especially as more big investors indicate they will back him.
More on that dicey problem for Yahoo coming up next…