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Legg Mason suggests $33 a share for Yahoo

Portfolio manager Bill Miller says it would take a bid of at least $33 a share if Carl Icahn wants more shareholders to side with him in his proxy contest.

Yahoo's third largest investor offered up some advice Tuesday to dissident shareholder Carl Icahn on what it may take to swing investor votes his way in a proxy fight, according to a Reuters report.

Legg Mason portfolio manager Bill Miller had this observation to offer to Reuters, when queried on whether he would support Icahn's proxy fight to unseat Yahoo's board of directors at the company's August 1 shareholders meeting:

The difficulty with Icahn is he'd have more shareholder support if he would say he wouldn't sell the company for less than $33.
Icahn art
What is the magic number for Carl Icahn? CNET News

Earlier this week, Icahn's proxy fight got a boost when Microsoft announced it would be willing to renew its buyout bid for all of Yahoo, or just its search assets, with a "new" Yahoo board.

Icahn and Microsoft, however both stated they were unwilling to discuss the details or price of any transactions that Microsoft may propose to a new board.

Said Icahn in his statement Monday, referring to Microsoft CEO Steve Ballmer:

I hope to continue to be speaking to Steve over the next few weeks; however, since I do not yet represent the Yahoo board, both Steve and I do not wish to get into details over price, or even which of these transactions makes the most sense.

Much has been said about how badly the Yahoo board has "botched up" negotiations with Microsoft over the past months. There is no need to keep pointing out the mistakes I believe Yahoo made by not immediately taking a $33 offer made by Microsoft.

Microsoft withdrew its sweetened unsolicited buyout bid in May, after Yahoo countered with a request for $37 a share, and failed to strike a partial deal for just Yahoo's search business in June.

As Miller calls on Icahn to issue a statement that he would not be willing to sell Yahoo to Microsoft for anything less than $33 a share, the portfolio manager may want to recall similar advice Icahn had given to Yahoo in early June.

Icahn, in a letter to Yahoo chairman Roy Bostock, had stated:

In my opinion, Microsoft does not believe you will ever sell the entire company on a friendly basis. So why don't you stop dancing around the subject and publicly offer to sell the company to Microsoft for $34.375 per share and promise to cooperate completely?

But, of course, that was a different time, a different era, in the five-month saga between Yahoo can Microsoft. That was a time when Microsoft was still willing to negotiate with Yahoo.

Now, as Microsoft said Monday in its statement of support for Icahn's proxy contest:

We have concluded that we cannot reach an agreement with them. We confirm, however, that after the shareholder election Microsoft would be interested in discussing with a new board a major transaction with Yahoo such as either a transaction to purchase the "Search" function with large financial guarantees or, in the alternative, purchasing the whole company.

Shares of Yahoo were down slightly in morning trading, nearly off 1 percent at $24.44 a share.