Yahoo investor backs management if Microsoft trims bid

April 9, 2008

yang-pensive.jpgYahoo shareholder Legg Mason tells the Wall Street Journal it’s ready to back Yahoo’s effort to stay independent if Microsoft lowers its buyout offer.

In an interview, portfolio manager Bill Miller of Legg Mason, which is the second biggest Yahoo shareholder with a nearly 7 percent stake, calls Microsoft’s moves to threaten a lowered bid a “blunder.”

“If Microsoft lowers the price I’m not prepared to say that’s better than Yahoo remaining independent,” he said.

Miller adds, “If Microsoft raises the offer, the pressure shifts very quickly to Yahoo to negotiate … To me, bumping the number up a buck [from $31 a share], that would have a big impact psychologically on shareholders.”

But it looks like Miller’s peers within the shareholders group are ready to throw in the towel. Piper Jaffray analyst Gene Munster on Monday said their survey of 20 institutional Yahoo shareholders say most of them favor the current deal to no deal at all.

Meanwhile, Yahoo Chairman Roy Bostock tells Bloomberg the company’s growth plans is gaining investor support.

Either shareholders are more willing to divulge their true feelings to Munster or Bostock is delusional. We’re not sure.

Keep an eye on:

  • Walt Disney Studios previewed 10 animated movies, most in digital 3-D, that it will release during the next four years, including further installments in the “Toy Story” and “Cars” series and two new fairy tales. (Reuters )
  • “American Idol” fans say baby-faced crooner David Archuleta will win the No. 1 television show’s current competition, even though they picked rival David Cook as the most talented performer, an E-Poll/Reuters survey found. (Reuters )
  • CBS layoffs signal a financial squeeze on TV stations (LA Times )

(Photo: Reuters)

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In its test of wills against Steve Ballmer and Microsoft Corp, the Board of Directors of Yahoo! Inc received critical support from one of its largest shareholders yesterday, the investment-firm Legg Mason Inc, which stated that Microsoft should increase its bid price. “Views of big shareholders like Legg Mason could play a significant role in how the situation plays out,” The Wall Street Journal reported in an article on Wednesday. Yahoo’s Directors could feel strengthened in their position as a result of Legg Mason’s support, and that support could make it more difficult for Microsoft to wage a proxy fight against Yahoo. Nevertheless, Yahoo’s Directors must safeguard against the company overplaying its hand against Microsoft.

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