Monday, February 11, 2008

International Herald Tribune: Group offers to sell Yahoo shares to Microsoft

By Anupreeta Das and Eric Auchard Reuters

Published: February 11, 2008

SAN FRANCISCO: A dissident group of Yahoo shareholders has started a campaign to sell its shares as a block, breaking ranks with Yahoo as it faces an unsolicited takeover bid from Microsoft.

Eric Jackson, leader of "Yahoo Plan B," an outspoken group of 100 current and former Yahoo employees who own 2.1 million shares, less than one-fifth of 1 percent of the outstanding shares, said Sunday that his group was prepared to negotiate separately with Microsoft or any other bidder.

"We have no desire to see Yahoo continue independently with the current board and management team in place," Jackson said on his blog site, Breakout Performance. "We believe that is a recipe for a $17 stock price. Therefore, we will band together as a group and agree to sell our Yahoo shares to the highest bidder."

When Microsoft made its unsolicited bid for Yahoo on Jan. 31, it valued the offer at $31 a share, or $44.6 billion. The value has slid along with Microsoft shares to a current level of $41.8 billion, or $29 a share.

Yahoo's stock, which traded at more than $40 two years ago, was hurt by competitive pressures from Google, product missteps, management defections and restructuring moves. It touched a 52-week low of $18.58 a day before Microsoft made its offer. Yahoo shares traded last week within a few cents of $29.

Yahoo's board is expected to reject Microsoft's offer as too low, a source familiar with the situation said Saturday. The New York Post reported last week that Capital Research and Management, which owns 11 percent of Yahoo and 6 percent of Microsoft, had met with Steve Ballmer, chief executive of Microsoft, to see whether he would raise the offer if Yahoo rebuffed it.

Jackson's group is the first among Yahoo shareholders to speak out publicly against the expected rejection of Microsoft's offer, and he called on other investors to join the block.

Jackson, who runs Ironfire Capital, an investment firm in Naples, Florida, figured prominently at Yahoo's annual meeting last June, where he led a move to challenge the direction of the company. He accused Terry Semel, then chairman and chief executive, of mismanaging the company and failing to do more to revive its share price.

"I am surprised that you didn't apologize for the last three years of performance," Jackson told Semel in front of shareholders at the meeting.

Jackson's campaign resulted in a hefty minority vote against the re-election of Semel, who resigned a week afterward as chief executive, and Roy Bostock, who was named Yahoo chairman two weeks ago when Semel stepped down from that post.

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