New York (HedgeCo.Net) – Another hedge fund is backing Carl Icahn’s proxy battle against Yahoo, days after Paulson & Co. gave their support.
Third Point LLC, a hedge fund that manages $5.7 billion in assets, is believed to be on board after accumulating 5 million shares of Yahoo Inc., along with T. Boone Pickens, an oil investor who has amassed 10 million shares.
An undisclosed source told reporters that Third Point head Dan Loeb “strongly supports Icahn and supports his slate and thinks that he is shining a bright light on the botched process at the Yahoo board in negotiating the deal with Microsoft.”
Icahn believes that Yahoo should be sold to Microsoft, in order to better compete with Google. Yahoo rejected Microsoft’s initial offer of $47.5 billion before the software giant broke off talks earlier this month.
Initiating his fight last Thursday, Icahn believes, “it is quite obvious that Microsoft’s bid of $33 per share is a superior alternative to Yahoo’s prospects on a standalone basis." Talks between Microsoft and Yahoo are said to have been revived.
Paulson & Co., the $30 billion hedge fund manned by famed John Paulson, currently holds 50 million shares in Yahoo. Paulson has expressed his desire for the merger, aligning himself with Icahn last week.
Hedge funds, who push for high returns in the short run, many times take a proactive approach in restructuring a company in which they are invested. Icahn is also aiming to strategically place himself, along with Mark Cuban, Frank Biondi and Robert Shaye on the board.
Even with only a few companies backing the proxy battle, the force behind them is monumental. The supporters will have accumulated over 80 million shares of Yahoo, which equates to over 5% of the total shares.
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