Carl Icahn Accuses Yahoo CEO of Sabotaging Merger Negotiations With Microsoft

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Back in early May, it seemed as if Yahoo and Microsoft were ready to strike a deal, following the software giant's offering over $45 Billion USD for the Internet company. Yahoo rejected the bid, calling it too low and Microsoft officially pulled it from the table on May 3rd.

Yahoo's refusal both sent their stock spiraling downward and angered stockholders. The decision spawned lawsuits against the company for breach of shareholder duty.

During an April meeting following the rejected deal, officers from Yahoo reported that CEO, Jerry Yang, would put in place a "poison pill" if the merger took play and said that "They are going to burn the furniture if we go hostile. They are going to destroy the place."

In a news story that was run four days later suggesting that the two might still be willing to compromise, it seemed like there was some hope for the merger after all.

Even still, key opposition to any merger between the two giants claimed that it "might hurt the Internet by compromising its openness".

Carl Icahn, an investor known for his ruthless takeover of TWA in the mid-eighties, has put in writing his ire over the flopped deal, calling Yahoo's Executive Heads essentially position hogs.

"I have constantly complained about how far CEOs and boards will go in order to retain their jobs, yet even I am amazed at the length Jerry Yang and the Yahoo board have gone to in order to entrench their positions and keep shareholders from deciding if they wished to sell to Microsoft," Icahn wrote.

On Tuesday, Icahn told The Wallstreet Journal that Microsoft would not return to negotiations until shareholders were given their say and a new board, including Yang, were no longer part of deal. The implication: Yang is intentionally trying to sabotage the merger.

In a written statement by Icahn, he said:

Therefore, the best chance to bring Microsoft and Yahoo together is to replace Yang and the current Yahoo board with a board that will negotiate in good faith with Microsoft and in whom Microsoft will have trust to operate the company during the long period between signing and closing," Icahn wrote.

One of the major problems between Yahoo and Microsoft is a severance package that Yahoo wants to provide its employees in the event the two companies strike a deal. Shareholders, investors and experts alike are appalled over the "generous" package available to anyone who wants to resign if the company is acquired. The package costs shareholders an additional $1.60 per share.

A judge ordered that the court documents be unsealed from the lawsuits against them early this week, with Yahoo reportedly "disappointed" by the order. Officials from Microsoft have said that they are no longer interested in Yahoo.

A battle that is over? Not until the fat lady has sung.