If, as expected, the Microsoft-Yahoo dispute turns into a proxy battle, Yahoo believes it's well positioned to win the war. Yahoo's investor relations team tells analyst Roger Kay of Endpoint
Technologies Associates that Yahoo can drum up enough support to beat back Microsoft's challenge.
The company already has the support of co-founders Jerry Yang and David Filo, who own 10% of
outstanding shares, as well as the two investment arms of Capital Research and Management Co., which together own 16.5%. Legg Mason, 7%, is the fourth major shareholder that Yahoo believes is in its
corner. If so, Yahoo would need less than 20 percent of the remaining shares to fend off Microsoft in a proxy battle.
"They're looking at their hand, and think they can win," Kay tells
Marketwatch, adding, however, that Yahoo's maneuver is based solely on the assumption that its shareholders agree the company is worth more than Microsoft's offer of $31 per share-not that Yahoo
should remain independent. "If they could count on a third of Yahoo's shareholders to stick by them in a proxy fight, it's one justification for going to the mat," Kay says. That said, Microsoft could
simply walk away from the deal, a move that would no doubt send Yahoo's stock into a tailspin. Yahoo shareholders will note that this is the risk they run in sticking by their company.
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