devils advocate

Yahoo's Top Investors Don't Want Microsoft to Raise Bid

The proxy is a bluff. It would never succeed and here is why! The proposed deal is equal to a stock price that is extremely close to the current value of yahoo (due to msft price drop). So, if you were an institutional investor, would you a) hold on to your shares for an indefinite period of time and an ugly proxy battle in order to vote to approve the deal (with more or less of an upside cap on the stock between now and then due to the deal) or b) sell your shares now for just about the same price. If microsoft chooses to try to get yahoo via proxy, there will be full capitulation of institutional ownership. Now, if you were a new stockholder, buying in in the 29-30 range, would you vote to accept a deal in the....er...29-30 range? Or would you vote NO to get more? There is no way that the shareholders who will vote yes will still be shareholders at that point in time because they can already get the deal price right now without having to go through the messy battle and downside risk (due to MSFT shareprice volatility). Those who will, think that the stock is worth more and therefore will vote no. IMO