The letter, revealed in a press release, said the following:
May 15, 2008Icahn then listed his slate of directors:
701 First Avenue
Sunnyvale, CA 94089
Dear Mr. Bostock:
It is clear to me that the board of directors of Yahoo has acted irrationally and lost the faith of shareholders and Microsoft. It is quite obvious that Microsoft's bid of $33 per share is a superior alternative to Yahoo's prospects on a standalone basis. I am perplexed by the board's actions. It is irresponsible to hide behind management's more than overly optimistic financial forecasts. It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72% premium over Yahoo's closing price of $19.18 on the day before the initial Microsoft offer. I and many of your shareholders strongly believe that a combination between Yahoo and Microsoft would form a dynamic company and more importantly would be a force strong enough to compete with Google on the Internet.
During the past week, a number of shareholders have asked me to lead a proxy fight to attempt to remove the current board and to establish a new board which would attempt to negotiate a successful merger with Microsoft, something that in my opinion the current board has completely botched. I believe that a combination between Microsoft and Yahoo is by far the most sensible path for both companies. I have therefore taken the following actions: (1) during the last 10 days, I have purchased approximately 59 million shares and share-equivalents of Yahoo; (2) I have formed a 10-person slate which will stand for election against the current board; and (3) I have sought antitrust clearance from the Federal Trade Commission to acquire up to approximately $2.5 billion worth of Yahoo stock. The biographies of the members of our slate are attached to this letter. A more formal notification is being delivered today to Yahoo under separate cover.
While it is my understanding that you do not intend to enter into any transaction that would impede a Microsoft-Yahoo merger, I am concerned that in several recent press releases you stated that you intend to pursue certain "strategic alternatives". I therefore hope and trust that if there is any question that these "strategic alternatives" might in any way impede a future Microsoft merger you will at the very least allow shareholders to opine on them before embarking on such a transaction.
I sincerely hope you heed the wishes of your shareholders and move expeditiously to negotiate a merger with Microsoft, thereby making a proxy fight unnecessary.
Carl C. Icahn
Himself, Keith Meister, Dallas Mavericks owner Mark Cuban and Viacom Inc. Chief Executive Frank J. Biondi Jr. ; Adam Dell, a venture capitalist and brother of Dell Inc. CEO Michael Dell; Harvard law professor Lucian Bebchuk; former Nextel Partners CEO John Chapple; Edward Meyer, the former CEO of ad agency Grey Global; money manager Brian Posner and Robert Shaye, founder and former co-CEO of New Line Cinema.
The question is, does Microsoft care? Microsoft has indicated it has "moved on," so Icahn may have to convince not just Yahoo! shareholders, but Microsoft itself.
Update: In a press release issued this afternoon, Yahoo! Chairman Roy Bostock defended his company’s decision to pass on the Microsoft offer, writing "we do not believe it is in the best interests of Yahoo! stockholders to allow you and your hand-picked nominees to take control of Yahoo! for the express purpose of trying to force a sale of Yahoo! to a formerly interested buyer who has publicly stated that they have moved on."
Yeah, we, say what you really mean, why don't you?