The epic proxy fight for Yahoo may soon be wrapping up. This morning the New York Post reports that Yahoo executives are scrambling to do a deal, although perhaps not the one that Carl Icahn and his friends are calling for. Apparently Yahoo is scrambling to ink something with Google to improve search.
But why has Carl Icahn, who owns 59 million Yahoo shares or 4% of the company, set off the deal panic at Yahoo? Well, he's got some powerful allies. John Paulson, the legendary head of Paulson & Co (who reportedly made $3 billion by shorting subprime mortgages) made owns an additional 5% of the company. He's reportedly on board with Icahn. And Icahn is set to buy another 4%, upping the dissident shareholder percentage to 12%. But that not the end of it, according to Henry Blodget.
No question how those shares will vote in a proxy fight. Then there's the 16% owned by Capital Research, whose Gordon Crawford was "extremely angry" with Jerry Yang for blowing the original Microsoft (MSFT) deal. And the 7% or so owned by Legg Mason's Bill Miller, who as much as said he'd be happy with $34 a share.
Add all of them together and you're at about 30%-35% of Yahoo's stock. Bill Miller won't vote to sack Yahoo's board unless he knows Microsoft will play ball, but let's assume Carl can at least create the impression that Microsoft's on board. Then Icahn, Paulson, & Co. only need to make it clear that they can scrape together another 15%-20% of the votes...and Jerry Yang and Roy Bostock will be on the next Seattle plane.