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First on CNBC: Legendary Activist Investor Carl Icahn Tells CNBC's "Fast Money" His Plan to Rescue Microsoft Deal from Yahoo (Transcript Included)

Carl Icahn
Shiho Fukada
Carl Icahn

When: Wednesday, June 4 at 5:15 PM ET
Where: CNBC's "FAST MONEY"

Following is the unofficial transcript of a FIRST ON CNBC interview with Carl Icahn on CNBC's "Fast Money." All references must be sourced to CNBC's "Fast Money."



DYLAN RATIGAN: WELCOME BACK TO "FAST MONEY." WE ARE HERE LIVE AT THE NASDAQ, AND LET'S CUT TO IT. CARL ICAHN SENDING A LETTER TO YAHOO!'S BOARD TODAY SAYING CEO JERRY YANG IS TRYING TO SABOTAGE A DEAL WITH MICROSOFT, A MOVE MR. ICAHN SAYS IS THE ONLY WAY TO SALVAGE THIS INTERNET COMPANY. CARL ICAHN JOINS US ON THE FAST LINE. WELCOME BACK TO THE PROGRAM. WALK US THROUGH, IF YOU COULD WALK US THROUGH -- WHAT IS THE LIKELY SERIES OF EVENTS BETWEEN NOW AND AUGUST AT THIS ANNUAL MEETING?

CARL ICAHN: YEAH. I THINK THAT WE'RE GOING TO BE IN A BIT OF A TIFF. IT'S GOING TO BE SORT OF INTERESTING.

RATIGAN: YOU'VE DONE THIS A NUMBER OF TIMES.PUT YOUR TACTICS FROM PAST BATTLES IN THE CONTEXT OF THIS ONE. HOW DO YOU FEEL ABOUT YOUR ODDS ON THIS ONE, FOR INSTANCE?

ICAHN: WELL, I THINK WE HAVE GOOD ODDS. I TELL YOU I'VE RARELY SEEN ONE WHERE THE COMPANY HAS GONE TO SUCH LENGTHS TO ENTRENCH THEMSELVES. AND IT'S A SAD COMMENTARY. I KNOW A PROSELYTIZE THIS ON CORPORATE GOVERNANCE, ACCOUNTABILITY, YOU HAVE A -- YOU WONDER WHY THE SHELL IS GENERALLY DON'T STAND UP MORE. THIS ONE IS SORT OF INTERESTING THAT A FEW OF THOSE LARGE MONEY MANAGERS HAVE REALLY COME FORWARD AND HAVE SHOWN THEIR IRE AND WELL THEY SHOULD.

RATIGAN: WHAT DO YOU VIEW AS YOUR BEST ALTERNATIVES?

ICAHN: WELL, YOU SAY "ALTERNATIVES." I CERTAINLY DON'T WANT TO SEE AN ALTERNATIVE DEAL WITH MICROSOFT. THEY'RE TALKING ABOUT, WHICH WOULD BE SOME HIGH-BRED WHICH WOULD DEVALUE NO MATTER WHAT THEY SAY AT A LOT LESS THAN THE 33 OR 34 THAT THEY WERE TALKING ABOUT.AND, OF COURSE, THAT WOULD ENTRENCH THE BOARD AND WOULD ENTRENCH JERRY YANG BUT WOULD BE TERRIBLE FOR SHAREHOLDERS.

SO, I DO BELIEVE THE FOLLOWING -- THAT THIS COMPANY, YAHOO!, IS A VERY STRATEGIC AND IMPORTANT ACQUISITION FOR MICROSOFT, AND EVENTUALLY I HAVE TO BELIEVE THAT THAT'S GOING TO HAPPEN. YOU KNOW, I NOTICE THAT BARRY DILLER, WHO I THINK IS A REAL SMART GUY, SAID INCOMPREHENSIBLE WHAT'S GOING ON HERE. SO, I DO BELIEVE SOONER OR LATER THE DEAL HAPPENED. WHAT MIGHT HAVE OCCURRED AND WHY -- I MEAN, YOU REALLY MIGHT NEED A NEW BOARD AND A NEW CEO BECAUSE OF ALL THE -- THIS ENTRENCHMENT THAT -- THE SHENANIGANS THAT HAVE GONE ON HERE. MICROSOFT NOT BE WILLING TO HAVE THE FAITH IN THE CURRENT BOARD AND JERRY YANG TO BE THE STEWARD OF THE COMPANY FOR CLOSE TO A YEAR WHEN HSV GOING AND WORKED OUT. AND THAT MIGHT BE ONE OF THE REASONS THAT THEY THEORETICALLY WALKED AWAY. AND ANOTHER REASON, WHICH IS UNCONSCIONABLE IN MY OPINION IS $2.5 BILLION SEVERANCE PACKAGE THAT THIS LAWSUIT SPEAKS ABOUT. AND TO ME, THAT IS A REASON THEY MIGHT NOT WANT TO DO IT. NOW, INTERESTINGLY, THE 30 DAYS ARE UP THAT MICROSOFT HAD TO PULL THE BID, SO THE IF THE COMPANY HAS ANY DECENCY ABOUT ITS SHAREHOLDERS, IT SHOULD NOW RESCIND THAT AND LEAVE IT OPEN FOR A SUITOR TO COME IN. BUT WE'LL SEE IF THEY DO THAT.

KAREN FINERMAN: HI, CARL.IT'S KAREN.

ICAHN: HI, KAREN.HOW YOU DOING?

FINERMAN: GOOD.HOW ARE YOU IN I'M A BIG FAN.

ICAHN: KEEP GOING.KEEP WORKING.

FINERMAN: SO, THE PACKAGE THAT THEY PUT TOGETHER, THE SEVERANCE PACKAGE PACKAGE, A BUCK SIXTY A SHARE, FIRST OF ALL, IT SEEMS AN EGREGIOUSLY LARGE PACKAGE AND I HOPE YOU CAN DO SOMETHING ABOUT IT, BUT REALISTICALLY, I DON'T KNOW IF YOU CAN. DO YOU THINK THAT MICROSOFT SHOULD TAKE THAT OUT OF ANY PURCHASE PRICE OR THAT THEY WOULD PLAN TO TAKE THAT OUT OF ANY PURCHASE PRICE?

ICAHN: WELL, IT'S COMPLETELY DISINGENUOUS.SUE DECKER SAYS TODAY WE'RE DOING EVERYTHING WE CAN BUT THE PRICE ISN'T HIGH ENOUGH. IT'S NOT HIGH ENOUGH BECAUSE OF THAT PACKAGE. AND IT'S A BIT WORSE THAN YOU'RE ALLUDING TO BECAUSE ONE OF THE THINGS THAT MICROSOFT, I WOULD IMAGINE, NEEDS HERE IS THE WORKFORCE. AND HOW DO YOU THEN GO IN AND TELL THEM THEY'RE PAYING $45 BILLION BUT WE'RE INCENTIVIZING THIS WORKFORCE THAT YOU WANT TO LEAVE? I MEAN, IT'S SORT OF -- IT IS SORT OF INCOMPREHENSIBLE WHAT THEY'RE DOING HERE.

JEFF MACKE: CARL, WHAT'S PLAN "B" ON THIS? I'M CONFIDENT YOU COULD BEAT THE SNOT OUT OF THE YAHOO! BOARD RIGHT NOW BECAUSE THEY DON'T HAVE A DEFENSE. I DON'T KNOW HOW YOU COULD MAKE MICROSOFT TAKE THE BAIT, IS ONE PROBLEM, AND YAHOO! IS DESTROYING VALUE EVERY SINGLE DAY.EVEN WITH THE AUGUST 1st DEADLINE, HOW DO YOU MAKE MICROSOFT TAKE THE BAIT AND HOW DO YOU KEEP YAHOO! INTACT--

ICAHN: I BELIEVE VERY STRONGLY, AND I'M NOT THE ONLY ONE WHO BELIEVES THIS. A LOT OF PROS IN THE TECHNOLOGY AREA WE TALKED TO BELIEVE THAT THE ONLY WAY, YOU KNOW, THAT MICROSOFT CAN COMPETE IN THE LONG RUN WITH GOOGLE IS TO HAVE YAHOO!, IS TO HAVE -- IS TO HAVE A PRESENCE IN THE SEARCH AREA, BECAUSE EVENTUALLY -- AND IT'S HAPPENING RIGHT NOW IN THE OFFICE -- YOU KNOW, WITH OFFICE STOCKS THAT GOOGLE IS PUTTING OUT, BUT YOU'RE GOING TO BE DOWNLOADING A LOT OF THESE OPERATION SOPERATIONS OR YOU'RE GOING TO BE -- OR APPLICATIONS, ACTUALLY.YOU'RE GOING TO BE DOWNLOADING EVEN IN THE HOME THROUGH THE INTERNET.AND OBVIOUSLY, THE MORE YOU CAN ADVERTISE ON THE INTERNET, YOU'LL BE DOWNLOADING THOSE AND DOWNLOADING THEM POSSIBLY FREE.SO, YOU WANT TO BE ABLE TO COMPETE WITH GOOGLE IN THE SEARCH AREA. AND, I MEAN, IT'S NOT ME SAYING THAT. I MEAN, IT'S OBVIOUS ALMOST WHEN YOU'VE SEEN THE -- HOW LONG MICROSOFT HAS BEEN TRYING TO ACQUIRE YAHOO! SO, I REALLY DO BELIEVE -- I MEAN, SOMETIMES YOU HAVE TO HAVE PATIENCE, BUT I BELIEVE IF IT'S NOT THIS MONTH, IT'LL BE SIX MONTHS FROM NOW. BUT IT'S CRAZY FOR THIS COMPANY NOW TO DO THIS ALTERNATIVE DEAL AND GIVE THE STORE AWAY, BECAUSE OBVIOUSLY, AN ALTERNATIVE DEAL IS A POISON PILL, BECAUSE ONCE YOU'VE DON AN ALTERNATIVE DEAL AND GIVEN THE SEARCH TO MICROSOFT, YOU DON'T NEED MICROSOFT TO BUY YOU ANYMORE. SO, THAT WOULD BE A POISON PILL, AS BAD AS THIS, IN QUOTES, INGENIOUS CONTRAPTION THAT JERRY YANG PUT TOGETHER AND CALLED IT A SEVERANCE PACKAGE, WHICH IS NOTHING MORE THAN AN IMPEDIMENT. AND HE NEGLECTED TO SAY THAT MICROSOFT EVEN PUT ASIDE $1.5 BILLION FOR THE EMPLOYEES.

RATIGAN: HOW CLOSELY ARE YOU IN COMMUNICATION, CARL, WITH MICROSOFT'S MANAGEMENT?

ICAHN: WELL, YOU KNOW, I REALLY -- I WOULDN'T SAY CLOSELY AND I WOULDN'T WANT TO TALK ABOUT IT ANYWAY, YOU KNOW? I WOULD JUST TELL YOU THAT I DO BELIEVE THAT MICROSOFT REALLY EVENTUALLY WOULD WANT AND WOULD NEED THIS COMPANY. SO, YOU SAY, WELL, YOU KNOW, YOU CAN'T SAY THAT THERE WILL BE A DEAL NEXT WEEK, BUT HOPEFULLY THERE MIGHT BE SOMETHING. AND WHAT I THINK THE SHAREHOLDERS HAVE TO DO HERE IS MAKE THEIR WILL KNOWN AND TELL THESE GUYS THAT THEY'RE NOT GOING TO ACCEPT SOME ALTERNATIVE DEAL AND THEY'RE GOING TO OUST THEM, THEY'RE GOING TO OUST THEM IF THEY DON'T GET SOMETHING DONE HERE.

FINERMAN: CARL, I THINK YOU SENT A REALLY STRONG MESSAGE TO THEM. THIS IS PROBABLY THEIR WORST NIGHTMARE TO WAKE UP SEEING YOU LAUNCHING A PROXY FIGHT AND ALL YOUR FRIENDS BILING IN, BOONE, PICKENS AND PAULSON. I'M SURE YANG DOESNT WANT TO BE OUT FROM THE COMPANY, WHICH COULD HAPPEN AUGUST 1st. WOULD YOU BE INTERESTED IN HAVING ANY CONVERSATIONS WITH THEM PRIOR TO THE ANNUAL MEETING TO SEE IF YOU COULD WORK SOMETHING OUT?

ICAHN: CERTAINLY. I DO TALK TO THEM, YOU KNOW, OCCASIONALLY AND MAYBE MORE THAN OCCASIONALLY ON THE YAHOO! SIDE.YOU CERTAINLY WANT TO SETTLE THESE THINGS. AND -- HOWEVER, I REALLY BELIEVE THAT THE ONLY ALTERNATIVE IS NOT AN ALTERNATIVE, IT'S A SALE. AND THAT IS SOMETHING THAT I THINK, IF WE DON'T DO IT AND WE DON'T CHANGE THIS BOARD OR CHANGE IT IMPORTANTLY, I BELIEVE THAT THAT WOULD BE A PROBLEM DOWN THE ROAD BECAUSE I AM NOT SURE. EVEN THOUGH I THINK MICROSOFT REALLY WANTS THIS, I'M NOT QUITE SURE THAT THEY'LL DO IT WITH THIS BOARD, BUT WE'LL SEE.

RATIGAN: HOW OFTEN ARE YOU FINDING, IF AT ALL, CARL, YOU'RE ABLE TO TALK DIRECTORY WITH YAHOO! MANAGEMENT AWAY FROM THE PUBLIC THEATER OF SUE DECKER ON CNBC OR TALKING WITH US HERE OR ANOTHER PUBLIC VENUE? HOW FREQUENTLY ARE YOU ABLE TO ACCESS YAHOO! MANAGEMENT IN A PRIVATE CAPACITY?

ICAHN: WE'VE BEEN ABLE TO TALK. THAT'S NOT THE ISSUE. THE ISSUE IS WHAT DOES THAT GET YOU. I MEAN, IT'S ONE THING TO TALK AND EVERYBODY SAYS, OH, YOU KNOW, WE'LL DO THE RIGHT THING FOR SHAREHOLDERS, WE REALLY WOULD SELL THE COMPANY AT THE RIGHT PRICE. I MEAN, THAT'S PRETTY MUCH THE MANTRA. BUT IT'S NOT WHAT'S REALLY HAPPENING. AND AFTER REALLY THIS FILING THAT LAWSUIT, I SORT OF REALIZED WHAT LENGTH THIS COMPANY AND BOARD WOULD GO TO TO ENTRENCH THEMSELVES. AND IT'S A SAD COMMENTARY, I REALLY BELIEVE, BECAUSE YOU DO HAVE A FIDUCIARY OBLIGATION TO YOUR SHAREHOLDERS.THE SHAREHOLDERS DON'T WANT THIS. OBVIOUSLY, THEY WANT TO SEE A SALE TO MICROSOFT, WHICH I THINK IS GOOD FOR OUR WHOLE BUSINESS SOCIETY. I MEAN, TO DO SOMETHING LIKE THIS AND HAVE A REAL COMPETITOR FOR GOOGLE.

RATIGAN: TO THAT END, I'M CURIOUS BECAUSE YOU KEEP BRINGING THAT UP, THE NATURAL BENEFIT TO BOTH MICROSOFT AND YAHOO! OF DOING THIS TRANSACTION BECAUSE OF THE STRENGTH OF GOOGLE RIGHT NOW. IF A TRANSACTION WAS TO COME TO BE, CARL, THAT WAS FINANCIALLY SUITABLE TO ALL PARTIES AND ALL THE REST OF IT, WOULD YOU BE INCLINED -- AND THIS IS A HARD QUESTION I SUPPOSE TO ANSWER -- BUT WOULD YOU BE INCLINED TO STAY WITH IT, COMBINE MICROSOFT/YAHOO! HAS A COMPETITOR TO GOOGLE.

ICAHN: WHEN YOU SAY "STAY WITH IT," YOU MEAN CONTINUE TO HOLD THE STOCK?

RATIGAN: YES

ICAHN: I MEAN, IT WOULD BE A DEAL FOR CASH AND FOR STOCK OF A COMBINED COMPANY, YOU KNOW, WHETHER I WOULD OWN THE STOCK OR NOT WOULD BE SOMETHING TO BE SEEN. I'M NOT GENERALLY A FUND THAT JUST HAS POSITIONS. WE'RE AN ACTIVIST FUND, BASICALLY.

BUT I DO THINK IT WOULD BE A VERY POWERFUL COMPANY.WELL, MICROSOFT IS POWERFUL TO BEGIN WITH.

RATIGAN: SURE.

ICAHN: BUT I THINK THIS WOULD MAKE THEM A LOT MORE POWERFUL. JERRY YANG HAS SAID IT WOULD BE A POWERFUL THING.

RATIGAN: IS THERE A MINIMUM PRICE AT WHICH YOU FEEL YOU WOULD NEED TO SEE IN A TRANSACTION IN ORDER TO FEEL COMFORTABLE WITH THE SALE?

ICAHN: YOU KNOW, I'M NOT GOING TO NEGOTIATE ON TELEVISION.BUT I THINK THAT THEY PRETTY WELL TALKED ABOUT THE PRICE THAT -- YOU KNOW, WHERE IT WOULD END UP, YOU KNOW.

RATIGAN: MEANING THAT --

ICAHN: SOMEWHERE IN THE MID-30s AREA, YOU KNOW.

FINERMAN: OH, COME ON, CARL.NEGOTIATE ON TELEVISION.I'M JUST KIDDING.

ICAHN: KAREN, YOU'RE TOO TOUGH. I CAN'T NEGOTIATE WITH YOU.

RATIGAN: USING OUR SECRET WEAPON. WE THOUGHT IF ANYBODY COULD GET IT OUT OF YOU, CARL, IT WOULD BE KAREN. THANKS FOR SPENDING TIME WITH US ON THE PHONE. OKAY. CARL ICAHN ON YAHOO! WE'LL TAKE A BREAK. BACK AFTER THIS.




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