The executives at Yahoo Inc. obviously believe in the saying ‘there are no permanent friends and no permanent enemies.’
It is well known that Yahoo! ran tests with arch rivals Google, to show AdWords advertising on Yahoo! Search. What is not so well known, however, is their opinion on the same subject.
On 30 January 2008, just a day prior to Microsoft’s announcement that they intentended to acquire Yahoo!, the board of executives, led by Jerry Yang had dismissed the suggestion of a tie up with Google, stating that although such a tie up may result in short term gains, it would not be a good idea in the long run, as it would reduce Yahoo!’s chances of becoming a “must-buy” for advertisers.
This fact was revealed following a complaint, filed by lawyers representing shareholders of Yahoo!, alleging that the board of directors at Yahoo! purposefully acted to discourage the Microsoft offer. In fact, the papers reveal that even as far back as January 2007, the then CEO, Terry Semel, had rejected Microsoft’s offer of $40 per share!
The complaint further alleges that CEO, Jerry Yang, has not acted in the best interests of the company, or the shareholders, but rather out of personal hatred against Microsoft. The plaintiffs go on to say, that the tie-up with Google was only a means to deter Microsoft, as the situation would lead to a lot of legal complications that would deter Microsoft.
According to Eric Auchard at Reuters, Yahoo!’s sudden change of heart following Microsoft’s takeover bid seems to prove that the partnership with Google is just a desperate bid to keep Microsoft away at any cost.
Mr. Carl Icahn, who has already received permission to buy more shares of Yahoo!, just had his position strengthened by these revelations, as he tries to oust the current board of directors, including CEO Jerry Yang, through a proxy contest.
The big question at Yahoo!, however, is that even if Mr. Icahn is successful in replacing the board, will Microsoft still be interested in the deal, and if so at what rate?