Icahn huddled with MS over Yahoo! search sale

Mixed messages

By Austin Modine in San Francisco • Get more from this author

Posted in Financial News, 5th December 2008 20:54 GMT

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Bazillionare investor Carl Icahn has held talks with Microsoft over the purchase of Yahoo!'s search business, according to a regulatory filing.

The filing also shows that Icahn - who now sits on Yahoo!'s board - purchased about 6.78 million additional Yahoo! shares last week.

A statement with the US Securities and Exchange Commission says Icahn has informed Yahoo! that "he is in favor of pursuing a transaction with Microsoft relating to the [Yahoo!'s] search business."

This runs counter to comments Icahn made on CNBC yesterday, when he said he is not interested in selling Yahoo! piece by piece.

In any event, yesterday's SEC filing says that "there are no understandings, written or oral" with Microsoft. Last week, The Sunday Times reported that Microsoft was in talks to buy Yahoo!'s search business.

The filing also Icahn and his affiliated entities paid an average of $23.49 per share between November 24 and 26 for additional Yahoo! stock, "because they believed that the shares were undervalued."

The purchase puts Icahn's accumulated stake at 5.45 per cent of the search firm. Since his first investments in the company nearly seven months ago, Icahn has sunk nearly $1.78bn for 75.6 million Yahoo! shares.

Presently, Yahoo! stock would need to slightly more than double in price for Icahn to turn a profit.

Icahn joined the Yahoo! board in August as a settlement to his proxy challenge to usurp the company's directors and negotiate a takeover bid from Microsoft.

Yahoo! CEO Jerry Yang's decision in November to step down swung the company shares up momentarily, but only to drop again when Steve Ballmer said Microsoft no longer has an interest in buying the Yahoo!.

Meanwhile, former AOL chief Jonathan Miller is reportedly raising cash to buy Yahoo! Icahn told CNBC he has spoken to Miller about the possibility of buying Yahoo!, but is not enthusiastic about the possibility because he feels the shares are undervalued. ®

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