Yahoo's major investors prefer Microsoft bid to "NO"

Microsoft executives have characterized their bid to buy Yahoo as generous. Yahoo's board has turned up its nose.

So what do Yahoo's investors think?

To find out, Gene Munster, a senior research analyst with Minneapolis-based Piper Jaffray, said he asked 20 of Yahoo's institutional investors their opinion of Microsoft's $31-a-share offer for the Sunnyvale company.

The answer: "the majority suggest they prefer the current deal to no deal," according to a report Munster sent his clients on Monday.

"We believe that Yahoo does not have alternative options to satisfy investors and that the deal fairly values Yahoo," he added, noting that "we feel the deal will be completed within three weeks."

Munster's report didn't identify the Yahoo investors he contacted or say precisely how many favored the Microsoft offer, and he didn't respond to a Mercury News request seeking more information about the survey.

When the Mercury News called a dozen large Yahoo investors Tuesday, all declined comment on Microsoft's offer or didn't return calls. Microsoft and Yahoo officials also had no response to the Piper Jaffray report.

But in an interview with Bloomberg Tuesday, Yahoo Chairman Roy Bostock said Yahoo's plan to remain independent of Microsoft has gotten a "very positive" response from Yahoo's investors.

Microsoft and Yahoo have been sparring since the Redmond, Washington software giant made its unsolicited offer to buy Yahoo on Feb. 1. Although Microsoft has called its proposed purchase price "full and fair" because it represented a 62 percent premium to Yahoo's closing price the day before the bid was announced, Yahoo has snubbed the offer as too low.

On Saturday, Microsoft Chief Executive Steve Ballmer threatened to launch a hostile takeover of Yahoo if his proposal wasn't accepted within three weeks.

That prompted Bostock and Yahoo Chief Executive Jerry Yang to send Ballmer a written reply on Monday saying they weren't adamantly opposed to Microsoft buying their company. However, they insisted Ballmer would have to pony up a better price.

Yahoo's shares closed at $27.70 Tuesday, which was no change from Monday.

courtesy: mercurynews