Yahoo rejects Microsoft … again

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Sunnyvale, Calif.—Yahoo rejected a joint offer made Friday by Microsoft Corp. and investor Carl Icahn that called for Microsoft to purchase the portal’s search business and Icahn to run the remaining pieces of the company.

The deal was conditional on the ouster of Yahoo CEO Jerry Yang and the current board of directors. Yahoo was also given less than 24 hours to accept it.

After reviewing the proposal with its legal and financial advisers, Yahoo’s board determined that accepting it would not be in the best interest of shareholders. It said the proposal undervalues Yahoo, particularly now that the company has partnered with Google on search.

“This odd and opportunistic alliance of Microsoft and Carl Icahn has anything but the interests of Yahoo’s stockholders in mind,” said Yahoo Chairman Roy Bostock in a statement. “Clearly, Microsoft, having failed to advance in search, is aligned with the short-term objectives of Mr. Icahn to coerce Yahoo into selling its core strategic search assets on terms that are highly advantageous to Microsoft but disadvantageous to Yahoo stockholders.”

Bostock characterized the move by Icahn and Microsoft as “erratic and unpredictable behavior” and suggested “it is ludicrous to think that our board could accept such a proposal.”

—Carol Krol

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