The already bitter battle between rogue investor Carl Icahn and the Yahoo board took a turn for the worst over the weekend.
Icahn said that, during the past week, Goldman Sachs had called him several times to discuss the transactions that Microsoft might be interested in completing with Yahoo.
The investor hinted that progress had been made towards agreeing a deal whereby Microsoft would purchase Yahoo's search business, and pay Yahoo for any searches that originate from a Yahoo content page.
"Yahoo felt that a deal of this nature would be very interesting, but only if Microsoft would guarantee the revenue that Yahoo now received," Icahn said.
"This would obviously be a great deal for Yahoo because Yahoo would, for five years, receive a minimum of the $2.3bn they are currently receiving as long as they continued to supply the page views and affiliate traffic they now had.
"Heretofore, Microsoft had been unwilling to even come close to making this guarantee.
"However, after I negotiated with [Microsoft chief executive] Steve Ballmer for the better part of a week, he agreed to the guarantee.
"He also agreed to commit $7.7bn to the transaction (consisting of a $1bn payment for 'Search', a $2.8bn loan and a $3.9bn tender offer to Yahoo shareholders)."
Icahn claimed that he was "surprised" when Yahoo appeared to reject the deal without discussions.
"I spoke to Goldman Sachs and [Yahoo chairman] Roy Bostock on Thursday concerning the breakthrough with Microsoft," he said.
"A call to discuss the details of the transaction was then set up among Microsoft, Yahoo and me on Friday afternoon, July 11th.
"However to my surprise and consternation, on the Friday call Yahoo, instead of being interested in the Microsoft offer, seemed to me to be focused on who would be running Yahoo.
"Finally, Steve Ballmer suggested that we not spend the rest of Friday afternoon on corporate governance. 'First tell us if you like the deal,' he said."
Icahn, who is trying to oust existing Yahoo board members and replace them with executives who would consider cutting a deal with Microsoft, was scathing in his attack on Yahoo.
"Over the years I have attempted to make changes at many companies, but I have yet to see a company distort, omit and twist events and facts in the manner that Yahoo has done in their press release issued Saturday night, July 12th," Icahn stated.
In its Saturday statement Yahoo accused Icahn of striking an "odd and opportunistic alliance" with Microsoft, a charge he has denied.
"Yahoo's press release states that 'this odd and opportunistic alliance of Microsoft and Mr. Icahn has anything but the interest of Yahoo stockholders in mind', raising the innuendo that I am on Microsoft's side in this manner. That is patently ridiculous," said Icahn.
"Since Yahoo failed to consummate a transaction with Microsoft this year, I have spent hours and hours attempting to get the parties together because I believe that it is beneficial to Yahoo shareholders to have a deal with Microsoft and I have worked hard trying to make it happen."
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