Yahoo's board members acted "irrationally" and "irresponsibly" in rejecting a $46bn bid from Microsoft, the billionaire Carl Icahn said yesterday as he launched a campaign to oust them.
The veteran corporate raider proposed an entirely new board committed to restarting takeover talks with the software giant, talks which he said had been "botched" by Yahoo's management.
And he signalled in a letter to Yahoo's chairman, Roy Bostock, that he already had informal support from some of the company's biggest shareholders, who were furious when a frustrated Micro-soft withdrew its bid at the start of this month.
"It is clear to me that the board of directors of Yahoo has acted irrationally and lost the faith of shareholders and Microsoft," Mr Icahn said. "It is quite obvious that Microsoft's bid of $33 per share is a superior alternative to Yahoo's prospects on a standalone basis [and] it is irresponsible to hide behind management's more than overly optimistic financial forecasts. It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72 per cent premium over Yahoo's closing price of $19.18 on the day before the initial Microsoft offer."
Yahoo had set a deadline of yesterday evening for shareholders to launch a challenge to the board at the company's annual meeting in July – and Mr Icahn said he had bought 59 million shares in recent days in order to mount his challenge. He has regulatory permission to double that stake from 4 per cent to 8 per cent, he revealed.
His slate of 10 directors include the former Viacom chief executive Frank Biondi, Mark Cuban, an entrepreneur who sold his business to Yahoo in 1999, and Adam Dell, the venture capitalist brother of the Dell computers founder Michael Dell. Mr Icahn is also seeking a seat for himself.
In his letter yesterday, Mr Icahn agreed with Microsoft's initial rationale for doing a deal, namely that a combination of Yahoo with Microsoft's MSN internet business would create a serious rival for Google in the battle for online advertising dollars.
After a stand-off lasting more than three months, Microsoft finally abandoned its bid following a bad-tempered meeting at Seattle airport between the company's chief executive, Steve Ballmer, and his opposite number at Yahoo, Jerry Yang.
Last night, it emerged that the hedge fund Paulson & Co had taken a stake of between 3 and 4 per cent in Yahoo. It was not clear if the fund would support Mr Icahn's attempt to oust the board.
Yahoo had no immediate comment to make on Mr Icahn's letter yesterday.