Will one man decide if Microsoft wins Yahoo?
Posted
Feb 11 2008, 11:30 PM
by
Charley Blaine
Chances are you haven't heard of Gordon Crawford, but my guess is that both Microsoft and Yahoo are paying close attention to whatever he thinks of Microsoft's $44.6 billion bid for Yahoo. (Microsoft is the publisher of MSN Money)
Crawford is a senior vice president at Capital Research and Management, the nation's largest mutual fund company. For years, he has been one of the world's top players in media investing. He helped Ted Turner sell Turner Broadcasting to Time Warner. Turner and Crawford are still pals; they share a passion for fly fishing.
And Crawford was one of the people who engineered Steve Case's departure from the board of Time Warner, back in those unhappy days when the media giant was AOL-Time Warner.
More important for our discussion: Capital Research is Yahoo's largest shareholder with 11.6% of the outstanding shares -- nearly twice as many as Yahoo co-founder David Filo. Capital Research boosted its position in Yahoo by 49.4% in the third quarter and, according to The Wall Street Journal, increased its stake in the fourth quarter.
Capital Research has a more-than-passing interest in Microsoft as well. Its 6% stake makes it the software giant's second-largest shareholder -- after co-founder Bill Gates, who owns 9.2% of the shares.
With a Yahoo stake that big, what Capital Research and Crawford decide to do with it will affect what everyone else does. And by everyone else, I mean the institutions who control 70% of Yahoo's shares. Of these, the top 15 own more than 40% of the stock.
So important is Capital Research to the question that, according to the New York Post, Microsoft CEO Steve Ballmer met with company officials, including, presumably, Crawford, just last week to explain the offer. And one concern the Capital Research may well have conveyed is that Microsoft not get drawn into a bidding war for Yahoo.
There's a feeling on Wall Street that Microsoft has overpaid for acquisitions. Case in point: the $240 million it put up for a 3% ownership position in social networking site Facebook.
It is probably fair to say that Capital Research is delighted that Microsoft has made an offer. Yahoo's shares had fallen 43% between its 2007 high of $33.63 on Oct. 26 to $19.18, its close on Jan. 31, the day before Microsoft announced its $31-a-share offer.
But given the stakes involved -- not to mention the armies of investment bankers, proxy solicitors and lawyers mobilized so far -- my guess is that Yahoo officials are going to do some serious courting of Crawford and Capital Research themselves to convince them that driving Microsoft away won't result in Yahoo's stock going back to $19.
