In its battle to avoid defeat against Microsoft Corp. (MSFT) and billionaire investor Carl Icahn, Yahoo’s (YHOO) board of directors received on Friday a major endorsement from Legg Mason Capital Management – a firm which owns a 4.4% stake in the company.
According to WSJ, Legg Mason Capital Management made it known that it would support Yahoo’s board of directors at the Aug. 1 shareholder meeting and has rejected Icahn’s argument – that the current board’s incompetence was the main reason negotiations with Microsoft Corp failed.
Legg Mason Capital, through its Chairman Bill Miller made a statement emphasizing the firm’s belief…
“…that the current board acted with care and diligence when evaluating Microsoft’s offers,” calling the board “independent and focused on value creation for long-term shareholders.” Mr. Miller also said he would prefer that the company and Mr. Icahn reach an agreement on the board’s composition to end what he called a “disruptive” proxy contest.
This latest statement from Legg chairman is in fact somewhat contradictory. As acquisition talks between Yahoo! and Microsoft fell apart in May, and the software company proceeded by withdrawing its sweetened unsolicited buyout bid, after Yahoo countered with a request for $37 a share — Mr. Miller – was one of the few large Yahoo-shareholders who publicly expressed his frustration, suggesting that “he would have been happy with a sale price lower than what Yahoo had demanded”.
Obviously schematics of the game must have changed for Mr. Miller to come out now and publicly throw his support behind the beleaguered Web portal.
But be that as it may. This is not an issue that’s waiting to be resolved through a comprise only between Miller and Icahn. Other heavy player are also in the game. Gordon Crawford is one of them who through his funds owns more than 6% of Yahoo’s stock. Crawford has publicly expressed his dissatisfaction with Yahoo’s board. However, it’s yet unclear how he will vote in the upcoming showdown.
Shareholder advisory firms also will sway the battle when they issue their opinions. The largest advisory firm, RiskMetrics ISS, which wields tremendous clout in counseling investors about proxy fights, plans to make its recommendation by July 23.
No matter how we look at Yahoo-M’soft saga, one thing for the moment is sure – for now, compromise appears quite unlikely.