Prominent investor sides with Yahoo
Legg Mason backs board vs. Icahn
NEW YORK - Legg Mason Capital Management Inc. chairman Bill Miller is backing Yahoo Inc. chief executive Jerry Yang in a fight for control of the board, saying a proxy contest with Carl Icahn would be disruptive.
Legg Mason Capital Management is the third-biggest of Yahoo's institutional investors and fourth-biggest overall, with 60.7 million, or 4.4 percent, of outstanding shares, worth about $1.36 billion. It will support the Internet company's current directors at the Aug. 1 annual meeting, Miller said yesterday in a statement.
Legg Mason is the first large institutional shareholder to publicly support the board, improving Yang's chances of staying in power. Icahn, 72, has recruited BP Capital LLC chairman T. Boone Pickens and hedge fund manager John Paulson in his campaign to unseat the directors and force Yahoo to strike a deal with Microsoft Corp., which wants to buy Yahoo's search business.
"The issue isn't so much enormous support of the current board and Jerry Yang so much as it is a lack of confidence that Icahn is a better alternative," said Darren Bagwell, director of equity research at Thrivent Asset Management, who helps manage about $60 billion, including Yahoo shares. Bagwell said he was "surprised" at Miller's decision and prefers Icahn's slate.
Yahoo, based in Sunnyvale, Calif., rose a penny to $22.45 in Nasdaq Stock Market trading. Microsoft fell $1.66, or 6 percent, to $25.86, the biggest drop since April 25, after reporting earnings Thursday that missed analysts' estimates.
Miller wasn't immediately available for comment. A Microsoft spokesman declined to comment. Neither a Yahoo spokeswoman nor Icahn immediately returned calls.
Icahn and his investment firms control about 69 million Yahoo shares worth $1.55 billion, or a 5 percent stake, according to regulatory filings, making him the second-largest institutional holder.
Two Capital Group Cos. entities, Capital World Investors and Capital Research Global Investors, constitute the biggest. Yahoo cofounder David Filo is the only insider with larger holdings than Icahn or Legg Mason.
