Despite its bold rejection of Microsoft’s $44.6 billion buyout offer, there is not peace around the Yahoo board table. The New York Post reported Friday that the board is divided, with one faction led by new Chairman Roy Bostock and billionaire Ron Buckle, and the other by CEO Jerry Yang.
The Bostock group is concerned that Yang’s strong emotional resistance to the Microsoft deal is trumping his fiduciary duty to look out for shareholders’ interests. All corporate directors face personal liability for actions that violate the “duty of care” and the “duty of loyalty” to shareholders.
“The emotional part of Yang would rather do anything but sell to Microsoft, but he doesn’t have the cards to come up with a value-creating, competitive alternative for shareholders,” an unidentified source told the newspaper. Aligned with Yang are Eric Hippeau of Softbank and Robert Kotick, CEO of Activision, said the Post’s source, who appears to be closely aligned with the Bostock faction. “They’re just as emotional as Jerry and as biased against selling to Microsoft as he is.”
The prospects of Yahoo maximizing shareholder value with a go-it-alone strategy look shaky compared to the guaranteed $31 a share Microsoft is offering. “We believe Yahoo would have to show substantial re-acceleration in revenue growth and margin expansion for the stock to be back substantially above $30 — something that requires a leap of faith today — if it were to stay independent,” Jefferies analyst Youssef Squali told the Post.
But the most unlikely of white knights has appeared: Rupert Murdoch. Yahoo is reportedly in talks with Murdoch’s News Corp. to trade 20 percent of the company for News Corp.’s MySpace social-networking site. That would give Murdoch control of Yahoo’s board. The largest shareholder today is Capital Research and Management with 11.36 percent.
Both sides described the…