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Yahoo Side Of Microsoft Offer: Revisionist History?

Carl Icahn
Shiho Fukada
Carl Icahn

With the deadline looming for investors to nominate a competing slate to Yahoo's existing board of directors--and Carl Icahn itching for a boardroom battle of his own for the stumbling internet brand--there are some interesting developments on Yahoo's own recollection of how and why negotiations with Microsoft broke down.

In today's New York Times, Legg Mason's Bill Miller is quoted as saying, "It isn't Yahoo that walked away from the deal. It is Microsoft who walked away from the deal." Miller says there was "no indication at all from the independent directors that they were anything other than diligent in their duties."

Diligent, maybe. But independent?

The fact is, negotiations didn't need to end, if these two companies simply wanted to continue them. Sounds facile, but hear me out: A source close to Microsoft says, "Instead of high-fiving, (Yang) should have said, 'Steve, let's talk.'"

I'm told that after a 4-plus hour meeting between Jerry Yang and David Filo with Steve Ballmer, the Yahoo co-founders stood pat on their own, personal $38 price-tag. That Yahoo's board didn't budge from $37. And that Microsoft came up to $33.

There seems to be a lot of disagreement over how to properly characterize these negotiations but what doesn't seem to be in doubt: Yahoo had an ask; Microsoft had a bid; Microsoft's bid changed; Yahoo's ask didn't. Nor did Yang and Filo's. Miller and Yahoo may want to paint Microsoft as the one picking up all its marbles and walking from the deal, but that decision wasn't made willy-nilly.

It's all a matter of perspective, I suppose, and not having been in the room with these principals, it's tough to get the real truth, the whole truth, and nothing but the truth.

So here we are, on the eve of the slate-nominee deadline. Yang's reputation has been sullied. But he may yet survive if Icahn's blustering doesn't translate into a new board of directors. And even if he does, there's hardly a guarantee that the new board could persuade Microsoft to return to the negotiating table. And if it does, would Microsoft still be in a mood to offer a 70 percent premium for a brand that's done its fair share of sullying Microsoft's reputation?

Icahn makes things interesting, but certainly not a done deal that Yahoo gets swallowed up. I still think a deal gets done with Microsoft. Eventually. Meantime, pay attention to the nuances from both sides about exactly what went down in these negotiations. And prepare yourself for Yahoo's July 3 shareholders meeting. That might be the best ticket in town. And some day--maybe that day--the real story is bound to come out.

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