Archive for the ‘Mergers and Acquisitions’ Category
The Yahoo Icahn Chapter – by Dennis C Carey
By: Dennis C Carey
Last week, it looked like the Yahoo leadership had turned the corner and was ready to move beyond the challenges of the past several months. The Yahoo/Microsoft/Carl Icahn saga had played out visibly and painfully in the media as Yahoo spurned Microsoft’s offer and dissident shareholder Carl Icahn began his own negotiations while calling for the ouster of Yahoo CEO and Founder Jerry Yang and board chairman Roy Bostock. In the height of the frenzy Yahoo stock hit a record $34, which fell quickly below $20 when the deal fell apart. Yahoo management seemed to recover by reaching an agreement in which Icahn and two members of his proposed directors slate were granted seats on an expanded Yahoo board. Yang and Bostock appeared to have emerged victorious from the annual meeting as they garnered 85 percent of the vote to retain their seats. Then, Boardridge Financial Solutions, a proxy voting intermediary for major investors, reported that had made significant errors in reporting the vote. Imagine the agony for Yahoo management when they announced after the market closed on August 5th that there were errors in reporting votes and that 33.7 percent of the shareholder votes were withheld for Yang, more than twice the opposition to his reappointment as in the first count.
It appears that what Carl Icahn started with his dissident campaign, other shareholders have joined the fray. Analysts are split over whether the recount was a symbolic embarrassment to the leadership or a new threat to its power.
The investor drama is likely to drag out for several quarters while Yahoo leadership tries to return to the serious business of managing its business. Bostock noted earlier that Yahoo was making progress in executing its strategy, “performing particularly well in light of the challenging circumstances.”
Challenging, to say the least. At a time when managing businesses to enhance shareholder value has been exceedingly difficult in today’s near-recession economy, Icahn’s actions proved to be a huge distraction for the company. Worse, he focused only on his agenda without portfolio, ignoring the larger interests of other shareholders.
I would encourage boards to be fiduciaries to ALL stockholders, and be careful not to negotiate one-off arrangements for minority shareholders. There simply aren’t enough board seats to go around if all shareholders take an adversarial position. In short, it is not good governance to bargain with board seats and further it is a troubling precedent to have a minority shareholder independently trying to facilitate a hostile transaction.
Yang said that the company is redoubling its efforts to driving “sustained, profitable growth for our stockholders.” Let’s hope that Jerry and his team get a chance to return to their business with their full attention and energy. I wish them well.
When Leaders Forget Human Capital
By Dennis Carey (full article here)
At the surface level, when a billionaire investor comes in and bids up a company’s stock price in anticipation of a merger, it would seem to be good news all around. However, too many deal makers focus entirely on the numbers, the synergies they anticipate, and the large payday and ignore how the news can impact employees. When star employees feel ignored, undervalued and not part of the future, they are likely to take their stock and cash out.
