Paulson Backs Icahn Yahoo Bid

May 16 2008 | 11:30am ET

Carl Icahn is winning hedge fund support in his bid to force Yahoo! Inc. to merge with Microsoft Corp., as the Internet company battles to fend him off.

The billionaire investor, who owns 4.3% of Yahoo, won the support of New York hedge fund Paulson & Co., which has bought a 3.6% stake in the Sunnyvale, Calif.-based company. Icahn has threatened to replace Yahoo’s board if it does not reopen talks with Microsoft, whose efforts to buy the search engine were rebuffed earlier this month. He has nominated candidates to fill all 10 of Yahoo’s board seats at the company’s July 3 annual meeting.

“We intend to support the Icahn slate but sincerely hope that Yahoo will negotiate an agreement with Microsoft, thereby making a proxy fight unnecessary,” Paulson chief John Paulson said. “We were disappointed that Yahoo failed to reach an agreement with Microsoft. We continue to believe that a combination between Yahoo and Microsoft would form a dynamic company and a stronger competitor to Google.”

Fellow New York hedge fund Eton Part Capital Management has also taken a Yahoo stake, buying shares and options that, if exercised, would amount to a better than 1% stake.

For its part, Yahoo Chairman Roy Bostock says Icahn is under a “significant misunderstanding” about Microsoft’s bid for the company, and said its current directors are best placed to make a decision about any tie-up. Icahn has said that Yahoo’s board has “acted irrationally.”

“We do not believe it is in the best interests of Yahoo stockholders to allow you and your hand-picked nominees to take control,” Bostock wrote to Icahn.


In Depth

Royalties: The Alternative Assets of the Music Industry

Jul 8 2016 | 7:01pm ET

Recent market volatility has investors seeking greater insight into alternative...

Lifestyle

Vortic: Making Great American Watches Again

Jul 25 2016 | 6:29pm ET

If you are compelled by stories of entrepreneurial vision & drive, or simply...

Guest Contributor

MPI: Like Stellar Returns? Better Understand the Risks First

Jul 22 2016 | 8:44pm ET

When the press reports extraordinarily strong relative or risk-adjusted returns...