Will Yahoo! Rush A Deal?

 | Jan 18, 2012 | 10:06 AM EST  | Comments
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Sarah Lacy speculated last night that the reason why Yahoo! (YHOO) Chairman Roy Bostock is still on the board is because there needs to be continuity in order to complete the cash-rich split before Feb. 24.

Feb. 24 is when Dan Loeb -- or any other shareholder -- can nominate directors to be elected to the board and effectively start a proxy fight.

While that's possible, it's important to remember a couple of things.

It's true that Yahoo!'s current board is under enormous pressure in the next month to take several steps in order to prove to shareholders that its plan of action is a better one than any competing plan that Loeb might propose.

Hiring Scott Thompson as CEO was one move. Getting a cash-rich split done would be another move. I suspect that Jerry left because he calculated that it could be yet another action judged positively by shareholders and help the company avoid a showdown with Loeb several months down the road. And don't forget, this board had previously floated the idea of making several changes to the composition of the board.

So, Lacy is correct that Bostock might be thinking he should stick around for continuity's sake to ensure the cash-rich split happens. But my impression of Roy Bostock is that he thinks very highly of himself. I'm sure it chafes him to hear the constant criticism. But this is a proud guy. He's not only staying on to help the deal. He's going to stay on until he has a big accomplishment (like a finalization of a cash-rich split) that he can hold up and shout: "See? I did this. Me. Roy Bostock. So cut the complaining about me, OK?"

But think of things now from the Yahoo! shareholders' side. They want a deal because it will help propel the stock price upwards. Yet, if a deal is going to be rushed and it's a bad deal, they certainly don't want that.

If their choice is to have Roy Bostock slap together a bad deal in February, or wait a few more weeks for Dan Loeb to negotiate a deal on their behalf, I believe most shareholders would rather wait, especially the largest shareholders who have already been in the stock for a long time.

But Jack Ma likely knows that such a change in the board will happen soon too and he's likely to push immediately to negotiate a deal with Bostock and others. I expect there will be a deal announced to Feb. 24, along with several director resignations and plans for a special dividend.

Yahoo!'s board will hope all those actions are strong enough to discourage Loeb from running his own slate.

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