In the latest maneuver in its ongoing battle with Microsoft, Web pioneer Yahoo warned its shareholders of  dangers the Sunnyvale, California-based company would likely face should control of the firm be given to billionaire activist investor Carl Icahn and his slate of alternate directors at its annual meeting on August 1, in a Thursday letter to shareholders written by co-founder and chief executive Jerry Yang and chairman Roy Bostock. Yahoo said that it would sell itself to Microsoft only under certain terms outlined in the letter, which was posted on the company's Web site. Yahoo Calls Icahn Statements Misleading In urging its stockholders to elect the slate of directors headed by Yang, Yahoo accused what it called the "Icahn-Microsoft alliance" of making continued "misleading statements about their plans for Yahoo," and said that if the alternate slate of directors proposed by Icahn were to gain control of the firm the change would "destroy stockholder value at Yahoo." A deal with Microsoft was still possible, as Yahoo was "open to negotiating a value creating transaction (including with Microsoft) that provides real and certain value -- not just the possibility of value," Yahoo said in the Thursday letter. "We will sell the entire company to Microsoft for $33 per share or more if Microsoft will negotiate a transaction that delivers certainty of value and certainty of closing," Yahoo said, calling the world's largest software maker "a well-respected and successful company." Yahoo asked its shareholders to view Icahn, who it said was "well-known as a corporate agitator," as inexperienced at managing the type of company that would be created if Microsoft were to acquire Yahoo, and said that Icahn lacked a "working knowledge of Yahoo." Still Open To Deal, But Not Microsoft's Last "Smoke and Mirrors" Offer Yahoo called the latest Microsoft proposal to purchase Yahoo's search business and restructure the rest of the business "smoke and mirrors," -- an offer Yahoo rejected Saturday night. "How can Yahoo stockholders  trust Mr. Icahn to deliver what he claims he can deliver," Yang and Bostock asked, and called Icahn's proposals a "misguided agenda" that along with his proposed slate of directors "present significant risk" to shareholders. Yang and Bostock said that Yahoo was still open to selling only its search engine business to Microsoft, but only if it were to the benefit of its stockholders. "We remain open to selling only search to Microsoft as long as it provides real value to our stockholders and resolves the substantial execution and operational risks associated with the separation of our search and display businesses," Yahoo said, and added that "we are fully prepared to do a deal with them." By selling its properties in the Asia Pacific region, which are strong performers in countries such as Japan and South Korea, Yahoo said that it could help boost its share price and return money to shareholders, in a move toward "unlocking the value of our Asia assets." Asia Pacific Region Web Properties Could Be Sold In June Yahoo signed mobile Internet  search agreements with five telecommunications companies in the Asia Pacific region, bringing to 60 the total number of its similar partnerships worldwide and giving the firm the ability to reach some 600 million mobile subscribers. In the Thursday letter Yang and Bostock told Yahoo shareholders that Microsoft was "more interested in destabilizing a key competitor so that it can either enhance its competitive position or buy our highly valuable search business." Icahn, who owns a stake of some 5 percent in Yahoo, or about 70 million shares, has contended that the current Yahoo board members, including Yang, are more concerned with keeping their jobs than working towards a Web search agreement with Microsoft. Yang and Bostock have two weeks to convince Yahoo shareholders that the firm will be better off under the leadership of the slate of directors Yang has put forth, and sought to portray Icahn as having limited knowledge of the Internet in its Thursday letter. Yahoo Warns Shareholders Of Dangers In Icahn-led Proxy Battle Negotiations led by Icahn "would not lead to an outcome that would be in the best interests of Yahoo stockholders," Yahoo said earlier this month. Icahn has said that Yahoo's board of directors made a flawed  move when it refused Microsoft's takeover bid valued at $47.5 billion at the time, because it was detrimental to maximizing financial gains for Yahoo shareholders. Yahoo will hold its annual shareholder meeting on August 1 in San Jose, California, during which Icahn is expected to seek to have his alternate group of directors elected, replacing the current Yahoo board members with directors more agreeable to selling Yahoo to Microsoft. Yahoo has held talks with Time Warner relating to a possible sale of its AOL business, and Microsoft has held separate talks surrounding its own purchase of AOL. Related Links:
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