Yang facing mutiny at Yahoo!; BCE, banks continue talks; Take-Two taking more offers

By Aaron Hochman-Zimmerman

New York, May 20 - As the sky was falling around equities in trading Tuesday, a rebellion was rising against Yahoo! Inc. chief executive officer Jerry Yang.

The company's shares hardly moved, but word of new mercenary proxy fighters traveled quickly as activists Dan Loeb and T. Boone Pickens joined Carl Icahn.

Microsoft Corp. kept its distance by not advancing its current offer beyond interest in Yahoo!'s search ad business, but still ruled out nothing.

Meanwhile, shares of Electronic Arts Inc. and Take-Two Interactive Software Inc. were both up as Take-Two was said to be in talks with other parties after rejecting Electronic Arts' latest attempt.

BCE Inc. also improved as the Canadian telecom and its team of financing banks kept an open line for renegotiating the financing terms of its buyout.

The reportedly intense talks have not yielded any results or at least any results which have been disclosed to the public.

In the broader market, the Dow Jones Industrial Average was pounded for 199.48, or 1.53%, to end at 12,828.68, while the Nasdaq Composite Index gave up 23.83, or 0.95%, to finish at 2,492.26.

The S&P 500 lost 13.23, or 0.93%, to close at 1,413.40.

BCE, banks still silent

Without any indication of what has been said behind closed doors, a market source was mostly convinced that the banks will be able to change some of the financing terms of the $52 billion acquisition as the private equity team gets closer to buying BCE.

"[Monday] the Citigroup spokeswoman said she doesn't want to disclose what happened over the weekend," he said.

So "chances are they're not just going forward with it," a market source said.

"Look what happened with Clear Channel [Communications Inc.]," he added.

Still, the dispute over funding Clear Channel's buyout -and its resolution - may not exactly translate to BCE, another market source said.

There is no indication of where exactly the process stands, but the sides will meet on Wednesday in New York.

One market source said the deal is still running ahead of schedule.

Also, BCE announced that information regarding appeals filed by holders of BCE debentures will be available late Wednesday.

Shares of BCE (NYSE: BCE) picked up $1.13, or 3.09%, to close at $37.75.

Yahoo! uprising

Carl Icahn was reported to have brought on new allies in the civil war he is waging at Yahoo!

Dan Loeb's hedge fund Third Point LLC and Texas oil man T. Boone Pickens joined his side in the proxy war to deliver Yahoo! onto Microsoft, according to a market source.

"Loeb might double his position," he added.

"Now there's some serious firepower going," he said, "they're rounding the troops together."

"It was pretty interesting," he said, although "you knew other people were going to jump into the fray."

For its part, Microsoft has taken a softer tack and become the good cop by offering only to buy Yahoo!'s ad search business.

Microsoft's motive may be as simple as keeping Yahoo!'s share of the search market away from Google Inc., a source said.

Still, Microsoft may just be waiting for Icahn and friends to do the work internally that Microsoft chief executive officer, Steven Ballmer could not do across the negotiating table.

Microsoft may be waiting to collect Yahoo! at a discount "if all these guys keep building up 5%-6% positions ... and you know there were already some Yahoo! shareholders mad at Yang," a market source said.

"He blew the best offer they had," the source said about Yahoo! chief Jerry Yang.

Yahoo! (Nasdaq: YHOO) shares dipped by $0.20, or 0.72%, to $27.48.

"I'm surprised Yahoo! shares didn't move around more than they did," the source said.

Microsoft (Nasdaq: MSFT) shares lost $0.70, or 2.38%, to end at $28.76.

Google (Nasdaq: GOOG) shares improved by $1.08, or 0.19%, to $578.60.

Who is Take-Two talking to now?

On Monday, Electronic Arts extended its $25.74 per share or $2 billion bid for Take-Two.

Even with another month to decide, Take-Two rejected the offer as essentially the same made on March 13.

"This is the same highly conditional proposal that EA offered Take-Two stockholders on March 13, 2008, which our board of directors thoroughly reviewed and unanimously determined to be inadequate and contrary to the best interests of Take-Two's stockholders," said Strauss Zelnick, chairman of the board of Take-Two, in a release.

Now it seems that Take-Two may have had other offers in mind while issuing Monday's rejection.

The Grand Theft Auto producer has been considering offers from other companies, a market source said.

"You've got to wonder who these people are, but it's an attractive outfit," another market source said.

For now at least, "they're doing just fine independently," he said.

Shares of Take-Two (Nasdaq: TTWO) added $0.21, or 0.78%, to finish the session at $27.12.

Shares of Electronic Arts (Nasdaq: ERTS) also added $0.62, or 1.28%, to close at $49.05.

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