Icahn sets price tag for Yahoo

This post was updated at 1:38 p.m. PDT, with Yahoo's closing price.

Making his first public statement on a specific purchase price for Yahoo, billionaire investor Carl Icahn on Friday told the company's chairman to offer up Yahoo to Microsoft for $34.375 a share.

The topic of price, which Icahn was coy about during his interview on CNBC earlier this week, was one of two interesting nuggets in his saber-rattling letter to Yahoo's chairman Roy Bostock. That letter was one of several Icahn has sent to Yahoo since launching his proxy fight.

The second interesting tidbit is that Jerry Yang wouldn't be banished from Yahoo, should Icahn's dissident slate succeed in unseating Yahoo's current board at the August 1 shareholders meeting. Icahn is willing to let Yang hold onto his employee identification key as "Chief Yahoo," although his current CEO title would have to go.

Keeping Yang around would serve Icahn well on a number of fronts. For one, it may help with employee retention to keep the founder and familiar face wandering around the campus. Two, it may help his campaign to woo investors to vote for his dissident slate of directors, if they knew Yang would still be allowed in the building to offer advice and historical perspective to a new board. Question is, would Yang accept such a role?

On the money front, Icahn suggested to Bostock:

In my opinion, Microsoft does not believe you will ever sell the entire company on a friendly basis. So why don't you stop dancing around the subject and publicly offer to sell the company to Microsoft for $34.375 per share and promise to cooperate completely?

Icahn has served as a price setter before, in the takeover talks between BEA Systems and Oracle. After negotiations broke down between the two companies and Oracle walked away, Icahn, BEA's largest individual investor, hammered out a price with Oracle in the months that followed, resulting in a proposed price of $19.375 a share. Five days later, facing the threat that Icahn would go public with his support, BEA accepted the price.

Does lighting strike twice?

Apparently not. Yahoo issued this response to Icahn's proposal.

"His suggestion that we put out a price publicly to see if Microsoft will alter its stated position is ill-advised. As we have stated numerous times publicly and privately, we are open to any transaction including a sale to Microsoft if it is in the best interests of shareholders."

Yahoo closed up less than 1 percent to $26.44 a share, on a day when the broader markets took a hit. The Dow fell 394.64 points, or about 3 percent, while the Nasdaq dropped 75.38 points, also about 3 percent.

[svk1069]

Does nobody remember how Carl Icahn destroyed TWA?

Granted, TWA was an airline in trouble, but Icahn pillaged and burned what was left of them.

Now he wants to do the same thing to Yahoo, and people think that's a good idea? When are they going to realize that Icahn is ONLY in this to make money for himself. He could care less about Yahoo the company or it's employees.

[onlyauser]

Carl Icahn is a Saintly Icon to publicly traded businesses. He clears out the dead, dying and the weak. This is about business and money not warm fuzzies. Of course there is pain and anger because we are always dealing with peoples attachments and egos. In the long run it is always better to follow the money and PROFITS in business decisions and strategies. GO CARL. BURN THE DEAD, DYING, WEAK and POORLY MANAGED PUBLIC BUSINESSES that lack insight to wisely deliver shareholder profits. YEAH Saint Icahn...a great man...a icon!

[Paul Grantham]

Icahn is an icon for all that is bad in our current business environment, built on greed, misinformation, and egos. How did we forget that companies are established to serve the societies in which they operate, not the personalities with the most money.

[onlyauser]

CAPITALISM. If you don't like it the only choice you have is to LUMP-IT or move to CHINA. It's the American way. Insensitive faceless & profit driven especially the PUBLIC COMPANY arena. I hate to break it to you but once a company goes public it's ALL about dividends for shareholders & profit mongering (the concept of individual is TOTALLY dead). NO CONCERN for Joe Shmoe workin' man --- Joe only matters as shareholder, NOT A PERSON. Icahn simply plays our American Capitalist game better than anyone else and by the rules. Nothing is wrong with Carl.

[JCPayne]

Good... Make Microsoft blow all that money..... Maybe you aren't all that bad after all.......

Then I can cancel my Verizon-Yahoo! ISP and go with something else........

[JCPayne]

He'll make Yang rich tooo... Then Yang can go work for Google and pulverize Microsoft into dust.....