Boardroom Win for Icahn Will Trigger Yahoo Poison Pill

12 June 2008

SUNNYVALE, Calif: "Reprehensible", spluttered corporate raider Carl Icahn (pictured) after studying the small print in Yahoo's ingenious poison pill defense against hostile takeover or the unseating of its board – as intended by Icahn - at the company's annual meeting on August 1.

It seems as if America's most feared fiscal predator – who holds ten million Yahoo shares with options on a further 49m – is about to retreat from his bid to force Yahoo into an unwanted union with Microsoft.

Icahn last week called for Yahoo to rescind the plan, which the latter implemented in February following Microsoft's first unsolicited (and unwelcome) bid.

The plan guarantees a mix of cash and stock payments to all 13,800 Yahoo employees if they are either laid-off or quit after being reassigned to a new job within two years of a Microsoft takeover [or any other change of control]. The plan would hold good for two years after such a change.

The likely cost to Microsoft – and apparently Icahn, were he to succeed in removing Yahoo's board – would surpass $2 billion.

In an apparent admission of defeat, the billionaire investor said bitterly: "Now they [Yahoo's board] have found a way to entrench themselves forever."

But the raider, ever hopeful he can still make a killing from his speculative investment, doesn't think the poison pill scenario will dissuade Microsoft from reviving its bid for the company.

Icahn talked-up the potential merger as a "marriage made in heaven, even though they kind of hate each other." But it's unlikely Jerry Yang and the Yahoo board will be convinced by his California Dreamin'.

Data sourced from Wall Street Journal Online; additional content by WARC staff