Activists and mergers
Published: May 26 2008 19:15 Last updated: May 27 2008 09:13
Takeover talks generally boil down to two sets of management, their respective bankers and affiliated lawyers sparring in a windowless office. But, as Jerry Yang, Yahoo chief executive, is discovering, there can be a critical third party lurking in the background: the activist investor.
Carl Icahn’s decision to challenge Mr Yang over the failure of Microsoft’s attempt to take over Yahoo serves as a reminder that activism is not just about access to leverage and a loud mouth. The situation at Yahoo is tailor-made for Mr Icahn. Yahoo’s rejection of an apparent $33-a-share proposal was roundly criticised when Microsoft walked away. The subsequent drop in Yahoo’s share price indicated the level of confidence shareholders had in Mr Yang’s alternative strategy. There is a decent chance Mr Icahn will be able to push Yahoo and Microsoft back towards a deal – as he did when BEA Systems yielded to Oracle this year.
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