Tuesday, May 20, 2008
Icahn Yahoo Bid Gains Steam
WSJ reports that Carl Icahn's Yahoo bid is rapidly gaining support from exisiting and new shareholders. The list of supporters now includes Texas billionaire T. Boone Pickens, Daniel Loeb's Third Point LLC, and, as mentioned in the previous update, John Paulson of Paulson & Co. Their share of Yahoo stock is as follows: Icahn - 4.3%, Paulson & Co. - 3.7%, T. Boone Pickens - 0.75%, Third Point LLC - Around 0.5%. Icahn Gains New Support in Yahoo Push, Kevin J. Delaney, Wall Street Journal, 21st May 2008)
The key to Icahn's success is in the hands of Capital Group Companies, whose two divisions combined hold about 16.5% of Yahoo shares. They were willing to accept a Microsoft offer of $34 per share and have expressed their displeasure when Microsoft announced it was ending the Yahoo bid, so you could say they would want Icahn to succeed. The only thing keeping Jerry Yang from caving under now is the strong support he has from Asian stockholders like Masayoshi Son, and Yang's own 4% stake in Yahoo, along with co-founder David Filo's 5.9% stake.
All said and done, Icahn's support, put together, represents about 25% of Yahoo! Inc, which is about evenly balanced by Yang's supporters. That leaves ordinary, unaffiliated investors as the deciders. Two ways this can go over now. First, Icahn and his deep pocketed buddies, who are buying up Yahoo shares at a vociferous rate, gather enough support to make it a walkover. Or, and this seems more likely, an interested party arranges for a meeting between the two sides, and they hash out the options.
What these investors (except for the Capital Group Companies) are looking for is a quick profit by selling Yahoo to Microsoft. If Yang can offer an alternative, like enough cash to fulfill their demands, they will (that includes Icahn) sell out their shares to him. Question is, does Jerry Yang and/or the Yahoo! Board, have the deep pockets necessary to buy out about 10-15% of Yahoo! stock at a premium of about $8 above today's price (NASDAQ: YHOO - 27.48)?
The key to Icahn's success is in the hands of Capital Group Companies, whose two divisions combined hold about 16.5% of Yahoo shares. They were willing to accept a Microsoft offer of $34 per share and have expressed their displeasure when Microsoft announced it was ending the Yahoo bid, so you could say they would want Icahn to succeed. The only thing keeping Jerry Yang from caving under now is the strong support he has from Asian stockholders like Masayoshi Son, and Yang's own 4% stake in Yahoo, along with co-founder David Filo's 5.9% stake.
All said and done, Icahn's support, put together, represents about 25% of Yahoo! Inc, which is about evenly balanced by Yang's supporters. That leaves ordinary, unaffiliated investors as the deciders. Two ways this can go over now. First, Icahn and his deep pocketed buddies, who are buying up Yahoo shares at a vociferous rate, gather enough support to make it a walkover. Or, and this seems more likely, an interested party arranges for a meeting between the two sides, and they hash out the options.
What these investors (except for the Capital Group Companies) are looking for is a quick profit by selling Yahoo to Microsoft. If Yang can offer an alternative, like enough cash to fulfill their demands, they will (that includes Icahn) sell out their shares to him. Question is, does Jerry Yang and/or the Yahoo! Board, have the deep pockets necessary to buy out about 10-15% of Yahoo! stock at a premium of about $8 above today's price (NASDAQ: YHOO - 27.48)?
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