TheStreet.com's Jim Cramer says Filo and Yang own less than 10% of Yahoo! shares, so they can stall a deal but not stop it. Two guys with less than 10% of the shares outstanding blocked this Yahoo! (NASDAQ: YHOO) (Cramer's Take) deal -- Jerry Yang and David Filo. I understand this logic. They are founders. They probably hate Microsoft (NASDAQ: MSFT) (Cramer's Take). They feel tremendous pride. They think that surrendering to Microsoft would be like giving in to the Evil Empire.
But if they felt that, they should never have brought the company public. Once you are public you are for sale, either in pieces or all together, unless you have one of those travesty two-classes-of-stock configurations that I think shouldn't even be allowed and have almost always been disappointing.
So what happens? I think the stock acted very well yesterday. It should have been down more. I think what happened is that arbs looked at the holders and realized that if they bought up enough stock that was for sale they could force a sale or a new board of directors. Might take a year, but if you can buy something at $24 and sell it at $34 a year from now, well, let's just say that is a big win.
This is an entrenched management situation. They think they own the company. They don't. They have less than 10%. A couple of aggressive guys, including people who know the game, like Carl Icahn, will have Filo and Yang out on their butts next year at this time.
Which is why the stock didn't go to $22 and probably won't go much lower.
Two guys with 10% can hold off the cavalry, but they can't stop it.
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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in stocks mentioned.
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