Yahoo: Night of the Living Dead

I think even infamous zombie-movie director George Romero would have felt outmatched by the ongoing Yahoo takeover saga, which has gone beyond drama into farce, then back into drama, then taken a right turn into the bizarre, and now threatens to become The Takeover/Merger That Wouldn’t Die. Microsoft wants to buy it, then it doesn’t, then Carl Icahn gets his fingers in the pie, then Microsoft wants to buy just the search operation, then it wants the whole company again, then it wants to team up with someone like News Corp. in order to dismantle the company — and meanwhile, Yahoo is talking with everyone but your Aunt Sally about a merger to thwart Microsoft.

The latest twist is that Microsoft and Carl are apparently still working on a takeover deal for the company. Icahn has sent a letter to Yahoo — and Microsoft has released its own similar statement — saying the two would be happy to discuss a takeover of some kind, but only if Yahoo’s current board gets the axe — the implication being that either the company gets rid of them, or Carl’s alternate slate is voted in at Yahoo’s annual meeting. In both statements, the potential for a full takeover is outlined. Microsoft’s release says that following a replacement of the board, it would

“be interested in discussing with a new board a major transaction with Yahoo!, such as either a transaction to purchase the ‘Search’ function with large financial guarantees or, in the alternative, purchasing the whole company.”

This is the first official recognition (to my knowledge) that Microsoft would still be interested in purchasing the entire company, after repeated protests a month ago that it no longer had any interest in doing so. Has Yahoo’s ever-declining share price made it more attractive again, or was the Yahoo board really that much of a barrier to doing a deal? Perhaps a little of column A and a little of column B. In any case, a takeover appears to be a possibility again — and shareholders are growing hopeful again, to judge by the uplift in Yahoo’s stock. Will that be enough to force the board’s hand, or to push shareholders to do so at Yahoo’s August meeting? Some might be glad just to have the ordeal over with.

Meanwhile, Yahoo is apparently talking with AOL again about some kind of merger in an attempt to prove that it can make it without Microsoft’s help. Call it “Merger of the Living Dead.” As my friend Howard Lindzon describes it, this is like “watching three horse and buggy carriers get together and worry about trains and automobiles by merging and saving on hay.”

Update: In a statement in response to Icahn’s letter, the Yahoo board says it would be happy to talk about a deal if either Microsoft or Carl want to make one — the implication being that all this talk about the board is just a side-issue designed to push Yahoo’s share price down even further and create a more inexpensive deal for Microsoft. Meanwhile, Kara Swisher reports that a major Yahoo investor has told Jerry Yang that he’s ready to vote for Microsoft in August.

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