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My, What Big Eyes You Have: Carl Icahn's Hedge Fund Wolf Pack

Posted May 21, 2008 01:16pm EDT by Aaron Task in Investing, Internet, Newsmakers, Venture Capital, M and A, IPOs
Related: MSFT, YHOO

"We are not bidding to buy Yahoo," Microsoft CEO Steve Ballmer said Wednesday during a trip to Israel, Reuters reports. "Yet, we are trying to have discussions about deals with Yahoo that might create value, but not a whole acquisition of the company."

Unless Ballmer is bluffing, which is possible, Microsoft's stance is going to make life tough on Carl Icahn and his growing wolf pack of hedge fund billionaires.

Icahn's proxy fight now has the support of hedge fund titans T. Boone Pickens, John Paulson, Third Point's Daniel Loeb and others, according to various reports and filings.

The challenge for Icahn is that he's unlikely to get the support of big institutional shareholders like Capital Re's Gordon Crawford and Legg Mason's Bill Miller if Microsoft is unwilling to do a deal. Those shareholders know supporting Icahn's slate in the absence of a deal with Microsoft means giving up all leverage in any future negotiations.

So if no deal appears imminent as Yahoo's July 3 shareholder meeting approaches, Icahn's wolf pack might get out of Yahoo stock as quickly as they got in -- most likely at a profit, of course.

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