NEW YORK (Reuters) - Yahoo told shareholders on Wednesday that the search advertising pact it signed with Google earlier this month was "financially attractive" and struck the right strategic balance.
In a letter to shareholders, Yahoo said the deal would do more for stockholder value than Microsoft's
Microsoft then proposed on June 8 to acquire Yahoo's search business for $1 billion and a share of future search advertising revenue.
The new Microsoft proposal included an $8 billion investment which Yahoo said required it to commit to a 10-year exclusive arrangement that would have made Yahoo dependent on Microsoft for all of its search business.
"While Microsoft's search-only hybrid proposal may have been helpful to Microsoft, our board and management concluded it would have had a significant adverse impact on Yahoo! strategically," the letter said. It was signed by Chief Executive Jerry Yang and Chairman Roy Bostock.
Bostock and Yang have been criticized by activist investor Carl Icahn for not selling Yahoo to Microsoft. He has put forward a slate of board nominees.
The letter urged shareholders to reject Icahn's proposed slate and his "ill-defined agenda."
(Reporting by Yinka Adegoke, editing by Phil Berlowitz)