Icahn has no credible plan: Yahoo

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New York: Reiterating that the company is open to any transaction including a sale to Microsoft, Yahoo! has said billionaire investor Carl Icahn does not have credible plan for operating the internet major.

The latest response comes in the awake of Icahn's letter on Friday, urging Yahoo! to sell itself to Microsoft and also do away with the employee retention plan, which he termed as a "poison pill."

"Leaving aside Mr Icahn's inaccurate interpretation of our retention plan, we again note that he has no credible plan to operate Yahoo!," the internet major said in a statement on Friday.

Yahoo! also pointed out that cancelling the employee retention plan would have a destabilising impact on the firm and would not be in the best interests of the shareholders.

Responding to Icahn's suggestion that Yahoo! should sell itself to the software giant, the internet major noted that the firm is open to any transaction which would be beneficial for the shareholders.

"As we have stated numerous times publicly and privately, we are open to any transaction, including a sale to Microsoft, if it is in the best interests of shareholders," the statement said.

Earlier, on Friday, Icahn asked the internet major to sell itself to Microsoft at a price of $34.375 per share. "In my opinion, Microsoft does not believe you will ever sell the entire company on a friendly basis. So, why don't you stop dancing around the subject and publicly offer to sell the company to Microsoft for $34.375 per share and promise to co-operate completely?," Icahn wrote to Yahoo! chairman Roy Bostock.

Updated at 0800 hrs: Carl Icahn on Friday told Yahoo Inc that it should offer to sell the company to Microsoft Corp for $34.375 a share, as the financier fired another volley in an acrimonious war of words.

In Icahn's latest letter to Yahoo, he said if Microsoft doesn't accept the offer "in a friendly and cooperative transaction," he would push the Internet company to do a deal with Google Inc if he wins control of Yahoo's board.

Icahn, who is running a slate of directors to replace Yahoo's board at its Aug. 1 annual meeting, hadn't previously named a price at which he believes Yahoo should agree to sell.

Microsoft on May 3 walked away after making a verbal $33-per-share offer, with Yahoo demanding $37 a share. A straight cash offer of $34.375 would value Yahoo at about $48 billion. Yahoo shares closed up 8 cents at $26.44 on Friday.

Icahn, a billionaire and veteran of activist shareholder campaigns, renewed his attack on Yahoo and its co-founder and CEO, Jerry Yang, accusing him of "sabotaging" the possibility of a Microsoft deal. Investment funds controlled by Icahn hold about 59 million shares and options, or 4.28 percent of Yahoo.

"When the public owns shares, management can no longer treat the company as their plaything and fiefdom," Icahn said in an interview.

Icahn reiterated his previous demand that Yahoo cancel a "change of control" severance plan that awards accelerated benefits to all of Yahoo's staff in the event of a takeover.

He cited a recent shareholder lawsuit against Yahoo, where the company estimated the plan's value at $2.4 billion, which he said was "a major obstacle" to any Microsoft acquisition.

"They keep telling us that they have done this severance plan in order to aid the employees," said Icahn. "But just the opposite is true," he said, labeling it a "poison-pill severance plan."

Yahoo, in response, said Icahn has an "inaccurate interpretation" of its employee retention plan. "Mr. Icahn's suggestion that we cancel our retention plan would have a destabilizing impact on Yahoo," the company said.

It reiterated its view that Icahn has no "credible plan to operate Yahoo" if he wins his proxy campaign.

Microsoft declined to comment.

In an e-mail to employees, Yang said the proxy contest with Icahn had begun in earnest and asked them not to be distracted as the war of words intensifies ahead of the annual meeting.

"In my opinion, Microsoft does not believe you will ever sell the entire company on a friendly basis," Icahn said in his letter. "So why don't you stop dancing around the subject and publicly offer to sell the company to Microsoft for $34.375 per share and promise to cooperate completely?"

Icahn declined to say whether he has held discussions with Microsoft or Google.

Yahoo repeated that it is "open to any transaction including a sale to Microsoft if it is in the best interests of shareholders," but it would be "ill advised" to name a price.


ICAHN'S GAME PLAN

Icahn's jawboning over price is designed to prod Microsoft and Yahoo back into negotiations on an outright merger, said Canaccord Adams analyst Colin Gillis: "As a holder of Yahoo, Icahn keeps walking up the price. We have gone from the original Microsoft offer of $31, to $33 to now $34.375."

"Is he showing some anxiety here?" wondered Global Crown Capital analyst Martin Pyykkonen. "A lot of investors assumed that Icahn had some sort of a nod from Microsoft, even if he hadn't actually huddled with them," he said. "But so far it seems that Microsoft is playing hard to get."

Without an existing offer from Microsoft, Icahn's own slate would be in a weak negotiating position were it to win control of Yahoo and resume talks with Microsoft, both analysts said.

"Icahn's board clearly has a mandate to deliver this company to Microsoft," Gillis said. "Voting in this board without a deal on the table doesn't seem to make sense because Icahn's leverage with Microsoft would disappear."

Wall Street debated the significance of Icahn naming a price of $34 with 0.375, or 3/8 of $1, tacked on the end. One analyst joked "Icahn must have some vacation planned and he has to get that extra 3/8 of a dollar to pay for it."

Another explanation may be negotiating strategy designed to ensure Yahoo gets at least $34, he said.

The answer may be as simple as Icahn liking the number. His successful role late last year in forcing business software