One of the key goals of the public communications strategies that Microsoft and Yahoo are pursuing in their acquisition chess match is to sway investor opinion toward each company’s position. But at least one major Yahoo investor is viewing Microsoft’s ultimatum on Saturday as a “blunder.”
The Wall Street Journal has an interview with Bill Miller, portfolio manager at Legg Mason. It had 7 percent of Yahoo’s stock at the end of last year, making it the second-largest owner of the company that Microsoft proposes to buy.
Miller is prepared to support Yahoo’s efforts to remain independent if Microsoft lowers its bid — a threat contained in Saturday’s letter from Microsoft CEO Steve Ballmer. Yahoo responded Monday, saying it was not against selling to Microsoft, but that the price would have to be higher than the original $31-per-share offer, which has since declined in value to $29.17 (as of yesterday’s market close) because half the bid is tied to Microsoft’s slumping stock.
Here’s the Journal, quoting Miller:
” ‘The problem is Microsoft blundered with the letter this weekend’ by threatening to lower its offer, Mr. Miller said. ‘Telling the shareholders you’re going to take something away from them is not a way to get their support.’ “
Miller also suggested that if Microsoft were to bump the offer “up a buck” from $31 a share, it would immediately put pressure on Yahoo to negotiate a deal. That would cost Microsoft an additional $1.4 billion.
There’s also data out this week suggesting that other Yahoo shareholders favor Microsoft’s current proposal.
On Monday, Piper Jaffray analyst Gene Munster issued a report — disseminated to me and, I assume, other reporters by Microsoft’s outside PR firm for the deal, Joele Frank — that contained results of an informal survey he conducted among Yahoo investors. Writes Munster:
“In our limited sample of 20 institutional Yahoo investors, the majority suggest they prefer the current deal to no deal. We believe that Yahoo does not have alternative options to satisfy investors and that the deal fairly values Yahoo. Microsoft’s suggestion that changes in the market may cause them to lower their bid lead us to believe the deal will be completed in the coming weeks at the current $31 bid price.”
It’s not known, however, how many shares of stock that majority represents. Those details will become important should this go all the way to a proxy fight, where Microsoft will need enough Yahoo shareholder support to win election for its slate of candidates to replace Yahoo’s board of directors.