Pressure on Yahoo Increases

Some of Yahoo's shareholders are making their desire for a union with Microsoft known, although they think getting a better deal would be nice too.Bill Miller, an investment officer at asset management firm Legg Mason--Yahoo's second-biggest investor--wrote in a quarterly letter to investors that "It will be hard for (Yahoo) to come up with alternatives that deliver more value than [Microsoft] will ultimately be willing to pay," Miller wrote. He went on to say that Yahoo is in a "tough spot."

Nevertheless, Miller also urged Microsoft to increase its bid. He estimated Yahoo's value at near $40 per share, while Microsoft's original offer was $31 per share.

Further pressure to complete a deal has come in the form of the first shareholder suit against Yahoo. The Wayne County [Michigan] Employee's Retirement System of Michigan, which owns about 13,600 shares of Yahoo, has sued to force Yahoo to consider takeover offers--particularly Microsoft's. "We want the board to be responsible and to take this offer seriously, review it appropriately, and respond appropriately," said David H. Fink, a lawyer representing the retirement system. "Just saying no is not an appropriate response."Yahoo News, InformationWeek