Legg Mason won't back bid to unseat Yahoo! board

By Julie A. Miller

Washington, July 18 - Legg Mason Legg Capital Management will not support investor Carl Icahn's bid to unseat the Yahoo! Inc. board of directors at the internet services company's Aug. 1 annual meeting, chief investment officer Bill Miller announced in a public statement.

It's the latest broadside in a battle over Yahoo! that began in May, when Microsoft Corp. withdrew its offer to buy the company. Microsoft reportedly was willing to raise its offer from $31 per share, or $44.6 billion, to $33. But directors of the Sunnyvale, Calif.-based company reportedly demanded $37 per share.

Yahoo! shareholders filed a class-action lawsuit against CEO Jerry Yang and the other members of the Yahoo! board of directors for "thwarting" Microsoft's merger proposal. Icahn nominated a slate of candidates for the board, contending that Microsoft was willing to reopen discussions with a new board.

"We believe the current board acted with care and diligence when evaluating Microsoft's offers. We believe the board is independent and focused on value creation for long-term shareholders," said Miller, whose Baltimore-based investment firm is one of Yahoo!'s largest shareholders.

However, he added, "we believe it is appropriate for large shareholders to have representation on corporate boards" and "would prefer that the company and Mr. Icahn reach a mutual agreement on the composition of the board and end this disruptive proxy contest."

Miller had been noncommittal about Microsoft's original offer, but said the Redmond, Wash., software giant made a mistake when CEO Steve Ballmer threatened to lower its offer and launch a proxy battle to unseat the board, which Miller said did nothing to win over shareholders.

"While boards are there to protect shareholder interests, shareholders own the company. If Microsoft wants to acquire Yahoo!, it can make the terms and conditions of its offer public," Miller said this week. "If Yahoo! shareholders support it, I am confident the board of Yahoo! will accept it."

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