Carl Icahn Spurs a Rally in Yahoo Shares

November 29, 2008

(ChattahBox) — Yahoo shares rallied at the stock market after the billionaire, Carl Icahn announced that he had increased his stake in the struggling internet company. Yahoo’s shares had fallen60 percent after its takeover deal fell off with Microsoft. Investors had shown little appreciation when the Yahoo Chief, Jerry Yang, had stepped down and the company had announced that it is seeking its replacement. The company has been ailing, nevertheless.

Carl Icahn, the billionaire investor activist, is trying to move in further and has bought an additional 6.8 million shares of Yahoo on Thanksgiving. This has increased the speculation amongst the investors that Icahn may be trying to take over the company since the co-founder and the company chief have agreed to step down.

Icahn spent $67 million to buy 6,778,804 shares for an average price of $9.92. The purchases brought his holdings to 75,575,125 shares, or about 6% of the company’s shares outstanding. The stocks rallied 93 cents, or 9 percent, to $11.51 in the shortened trading session. Icahn now holds 5.5 percent stake in Yahoo which is about $870 million based on Friday closing price. He had started buying Yahoo shares in spring when Yahoo was still in talks with Microsoft about a possible merger between the two companies. After the deal fell through and Jerry Yang rejected Microsoft, Icahn tried to oust Yang and get the two sides back to the bargaining table. After Microsoft declared that it was no longer interested in buying Yahoo, except for snapping up its search business, Icahn has decided to move in further.

Icahn has so far bought shares at an average price of $25 per share this year. It makes perfect sense for him to buy more shares when the prices are ridiculously low. It would help him to recover from nearly $1 billion loss on the investment made so far.


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