SAN FRANCISCO, Feb 10 (Reuters) - A dissident group of Yahoo Inc YHOO.O shareholders said on Sunday it had launched a campaign to sell their shares as a block, breaking ranks with Yahoo as it faces an unsolicited takeover bid from Microsoft Corp (MSFT.O).
Eric Jackson, leader of an outspoken group of 100 current and former Yahoo employees that own 2.1 million shares and call themselves "Yahoo Plan B," said his group was prepared to negotiate separately with Microsoft or any other bidder.
"We have no desire to see Yahoo! continue independently with the current board and management team in place. We believe that is a recipe for a $17 stock price," Jackson wrote on his blog site, which can be found at tinyurl.com/3yglgz/.
"Therefore, we will band together as a group and agree to sell our Yahoo! shares to the highest bidder," Jackson wrote.
Jackson called on other investors to join the block. The 2.1 million shares he said he and his group own is a tiny fraction of the roughly 1.4 billion Yahoo shares outstanding.
But his group is the first among Yahoo shareholders to speak out publicly against the company's expected rejection of Microsoft's offer.
Jackson was the star of Yahoo's annual meeting last June, where he led a move to challenge the direction of the company.
In the meeting's most memorable moment, Jackson accused then Chairman and Chief Executive Terry Semel of mismanaging the company and failing to do more to revive its share price.
Microsoft recently said it was prepared to make an unsolicited bid for Yahoo that valued it at $31 a share, or $44.6 billion. The value of the deal has slid in line with Microsoft shares to a current level of $41.8 billion.
Yahoo's board is expected to reject Microsoft's offer as too low, a source familiar with the situation told Reuters on Saturday.
The Wall Street Journal reported over the weekend that Yahoo's board thinks Microsoft's offer "massively" undervalues the company and is unlikely to consider anything below $40 a share, quoting a person familiar with the matter.
Yahoo's stock, which traded above $40 two years ago, has been hammered more recently due to competitive pressures from Google Inc (GOOG.O), product missteps, management defections and restructuring moves.
Yahoo shares touched their 52-week low of $18.58 a day before Microsoft made its offer to Yahoo's board on Jan. 31 and closed their most recent trading session at $29.20.
Earlier this week, the New York Post reported that Capital Research and Management, which owns 11 percent of Yahoo and 6 percent of Microsoft, had met with Microsoft CEO Steve Ballmer to see if he would raise the $31 offer if Yahoo rebuffs it.
At Yahoo's June 2007 annual meeting, Jackson, who runs an investment firm called Ironfire Capital, had spearheaded a move to vote against board-nominated directors.
The campaign resulted in a hefty minority vote against the re-election of Semel, who resigned a week afterward as chief executive, and Roy Bostock, who was named Yahoo chairman two weeks ago when Semel stepped down.
"I am surprised that you didn't apologize for the last three years of performance," Jackson had told Semel in front of shareholders at the meeting. (Editing by Braden Reddall)