Shareholder revolt may derail MS bid for Yahoo

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Jun 26, 2007
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Microsoft may not be able to acquire Yahoo as easily as the company believes, a group of portfolio managers told reporters on Monday.
Unless Microsoft increases its bid from the current $31 (£15) per share price, a group of investors that currently owns about a quarter of Yahoo says it will not support the acquisition in the event of a proxy fight.
Throw in the small matter of Yahoo’s officers owning an additional 12 per cent of the company, Microsoft may be facing opposition from more than one-third of the firm’s shareholders.
Stiff competition
“I'm not dying to sell at $29 (£14), which is where the deal is priced at now, or even $31 (£15) (the deal value at the time of the initial offer),” said one portfolio manager.
“I'm pretty happy to own Yahoo. And I know that if Microsoft doesn't get it now, it'll come back a year from now because it needs Yahoo.”
Although the odds may look daunting for Microsoft, the company still believes that it can engage in a proxy fight and win. Regardless, Microsoft will admittedly need to do something to bring more shareholders to its side and raising the offer price – a move that it has repeatedly said it will not do – may be its only option.