NEW YORK – Billionaire investor Carl Icahn has amassed a stake in Yahoo and could soon launch a proxy contest to unseat at least part of Yahoo’s board, The Wall Street Journal reported Tuesday.
Icahn has bought roughly 50 million Yahoo shares since Microsoft Corp. on May 3 withdrew its unsolicited offer to buy Yahoo, the person said. That would give Icahn less than a 4 percent stake in the Internet giant. Security and Exchange Commission rules would force Icahn to disclose his shares in Yahoo should he amass 5 percent of more.
Icahn is expected to decide Wednesday whether to launch a proxy contest — a Yahoo deadline for board nominations looms Thursday — and he currently has no assurances from Microsoft it would reconsider a Yahoo purchase. The person said that Icahn was unsure whether he would nominate a full or partial slate of candidates to try to replace Yahoo’s 10-person board. A shareholder vote on any such nominees would take place at Yahoo’s annual shareholder meeting on July 3.
A spokeswoman for Icahn declined to comment.
Other activist hedge-fund managers also are eyeing Yahoo and deciding whether to become involved in any fight. Scott Galloway, founder of investment firm Firebrand Partners LLC, and his firm are examining the situation and may get involved, according to people close to the matter. Galloway, who waged an activist campaign against New York Times Co. that recently netted him a board seat, declined to comment. A person familiar with the matter said that he and Icahn were not currently coordinating their efforts.
One reason for such an activist effort may be to rekindle negotiations to sell Yahoo to Microsoft at a premium to its current share price. The earlier talks broke down May 3 with Microsoft citing a divide on price. Since then, some Yahoo shareholders have tried to pressure Yahoo’s board to return to Microsoft and try to sell the company. Some large Yahoo shareholders have contacted Mr. Icahn in recent days, urging him to become involved, said one of the people familiar with the matter.
But, for now at least, Microsoft has moved on and is not considering such a deal, said people familiar with the matter. A Microsoft spokesman declined to comment other than to cite Chief Executive Steve Ballmer’s May 3 letter withdrawing Microsoft’s offer as the company’s current stance.
One person close to Yahoo said that some at the company are not overly worried about a proxy challenge because they believe investors who wouldn’t support such a campaign hold a significant enough share of its capital. Yahoo co-founders Jerry Yang and David Filo together own roughly 10 percent of Yahoo. A Yahoo spokesman declined to comment.
Even without any certainty of an eventual Yahoo sale to Microsoft, Icahn considers its shares an attractive value and is willing to hold them for an extended period, one person familiar with the matter said. Icahn, whose Yahoo stake was worth roughly $1.3 billion as of Tuesday, has been successful with other activist campaigns, including one that led to the sale of BEA Systems Inc. to Oracle Corp. earlier this year. He has been cautious about the stock market and so had ample cash available to fund his Yahoo purchases, according to the person familiar with the matter.
This article appeared in Wednesday�??s Wall Street Journal.
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