SEATTLE - Yahoo Inc. shelled out US$36 million in the first half of 2008 to the outside advisers that helped the company navigate stormy buyout talks with Microsoft Corp. and the ensuing proxy threat from activist investor Carl Icahn.
Yahoo leaned on investment banks Goldman Sachs Group Inc., Lehman Brothers Holdings Inc. and Moelis & Co., and the law firm Skadden Arps Slate Meagher & Flom, after Microsoft made its initial US$44.6 billion offer, which was made public in February.
The negotiations collapsed in early May when Yahoo rejected an even richer US$47.5 billion offer, but Microsoft came back later that month with an offer to buy Yahoo's search operations a la carte. As that failed, Icahn, who has a long history of challenging corporate boards, threatened to replace all of Yahoo's directors with his own hand-picked slate so he could negotiate a sale.
Yahoo's US$36 million tab, disclosed in a regulatory filing, amounts to about 5 per cent of the US$673 million in profit Yahoo reported in the first six months of the year.
That total doesn't cover what the company spent in July, when Icahn and Microsoft joined forces to pitch another partial sale scheme, which the Sunnyvale, Calif.-based company rejected. Later in July, Yahoo struck a deal that gives board seats to Icahn and two of his picks.
Yahoo's spending on outside advisers did include litigation defense costs related to the Microsoft saga, according to the recent Securities and Exchange Commission filing.
Yahoo's SEC filing detailed several shareholder lawsuits claiming that Yahoo executives and board members breached fiduciary duties during the buyout negotiations. The lawsuits claim that Yahoo's search advertising partnership with Google Inc. and its updated severance plans for employees were designed to dampen Microsoft's interest in acquiring the Silicon Valley pioneer, according to the filing.
