Microsoft had submitted an "enhanced proposal," it said, after corporate raider and Yahoo investor Carl Icahn had discussed the matter with both Microsoft's management and Yahoo Chairman Roy Bostock.
The enhanced proposal contained "significant revenue guarantees, higher TAC [traffic acquisition cost] rates, an equity investment and an option for Yahoo! to end the agreement over a 10-year period," according to an announcement issued by Microsoft.
Icahn's statement on the matter described a complex scenario that would involve Microsoft committing $7.7 billion toward buying Yahoo's search business, with shareholders getting "$16.25 per share in distributions."
If that deal was ever OK with Bostock, he didn't indicate it as such. Instead, Bostock characterized Microsoft's renewed bid as "erratic and unpredictable behavior."
Yahoo said it had been given 24 hours on Friday to decide on the enhanced proposal. However, Microsoft's announcement disputed that characterization, saying it just was asking for a "letter of intent and more detailed term sheets."
Microsoft also disputed that it wanted to change Yahoo's "governance," although Microsoft's CEO Steve Ballmer has said that it can't work with the current Yahoo board. Icahn's announcement stated that Microsoft and he "were willing to discuss keeping a number of the current board members and Jerry Yang as Chief Yahoo!"
However, Icahn himself has been actively trying to replace Yahoo's board with his own slate of candidates, since all of Yahoo's board members can be replaced when shareholders vote on Aug. 1. Icahn also has been publicly critical of Yahoo's management for not accepting Microsoft's original bid -- then valued at $44.6 billion -- for the whole company.
Microsoft's explanation of events led stock observer Henry Blodget to speculate that "Carl Icahn has lost" and that "Yahoo will win the shareholder vote."
Yahoo tells Icahn its own board knows best
Yahoo Rejects ‘Erratic’ Microsoft Search Bid