Yahoo settles with Icahn to avert August showdown
Yahoo Inc. is relinquishing three seats on its board of directors to activist investor Carl Icahn, ending a battle for control of the Internet company while still leaving the door open for a possible sale to Microsoft Corp.
The truce announced Monday gives Yahoo a reprieve from two months of bickering with Icahn, who had been spearheading a shareholder rebellion aimed at replacing the company's entire board in retaliation for its rejection of Microsoft's $47.5 billion takeover bid in early May.
The showdown had been scheduled to culminate in a shareholder vote at Yahoo's Aug. 1 annual meeting.
That gathering now looks like it will be a largely perfunctory affair to ratify a cease-fire that will give Icahn three of the 11 seats on Yahoo's expanded board.
Eight of Yahoo's current nine directors will remain on the board, leaving the company's current regime headed by Chairman Roy Bostock and Chief Executive Jerry Yang in the driver's seat.
Robert Kotick, the CEO of video game maker Activision Inc. and a Yahoo director for the past five years, will surrender his seat as part of the agreement.
But the compromise negotiated over the weekend doesn't necessarily settle Yahoo's fate, which has been unclear since Microsoft made its first unsolicited offer in January.
Icahn, who owns a 5 percent stake in Yahoo, emphasized he still believes a sale of all or part of Yahoo may still be the best way for the Sunnyvale, Calif.-based company to lift its sagging stock price. And with more than $1.5 billion invested in Yahoo, Icahn isn't likely to be content with the status quo. He paid an average of about $25 per share for his Yahoo holdings, meaning he will sustain a loss unless the company's stock perks up.
Yahoo shares fell 61 cents to $21.84 in Monday's late morning trading a far cry from the $33 a share that Microsoft CEO Steve Ballmer dangled in early May before withdrawing the bid after Yang sought $37 per share.
Icahn's involvement on corporate boards haven't always yielded big returns. For instance, he won three board seats at Blockbuster Inc. in May 2005 and, since then, the movie rental chain's stock price has plunged by about 75 percent.
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