Legg's Miller undecided on Icahn's Yahoo slate

NEW YORK (Reuters) - Bill Miller, the star portfolio manager at Legg Mason Capital Management, has not yet decided whether to support a dissident board slate at Yahoo YHOO.O backed by billionaire investor Carl Icahn.

Investor Carl Icahn speaks at the Wall Street Journal Deals & Deal Makers conference, held at the New York Stock Exchange, June 27, 2007. REUTERS/Chip East

But in an interview at a New York conference on Wednesday, Miller, whose fund controls a 5.4 percent stake in Yahoo, said he wants Microsoft MSFT.O to reopen talks to buy Yahoo outright and not simply forge a joint venture.

“It is a strategic imperative for Microsoft to change its position,” Miller told Reuters after speaking at the hedge fund conference.

Icahn is seeking to pressure Yahoo to agree to be acquired by Microsoft. The software giant walked away from talks earlier this month after Yahoo demanded a higher price than the $33 (16.67 pounds) per share, or $47.5 billion, offered by Microsoft.

Asked if he would support Icahn’s Yahoo slate, Miller said: “I don’t know yet. It’s our fiduciary duty to look at it.”

He declined further comment.

Legg Mason Capital Management, a unit of fund manager Legg Mason LM.N, held 405,000 Microsoft shares and 64 million shares of Yahoo as of March 31, according to regulatory filings.

Icahn, for his part, said in a presentation on Wednesday that Microsoft should take advantage of the renewed shareholder pressure on Yahoo from the proxy battle he launched on May 15.

“Microsoft would be crazy to give up this opportunity that we’ve handed them in this fight,” Icahn told hundreds of investors at a presentation at the Ira W. Sohn Investment Research Conference in New York.

Icahn disclosed on May 15 that he accumulated 59 million Yahoo shares and options and assembled a 10-member dissident board slate for election at Yahoo’s annual meeting on July 3.

A number of hedge funds, including Dan Loeb’s Third Point and John Paulson’s Paulson & Co, are supporting Icahn’s move.

Microsoft CEO Steve Ballmer said publicly on Wednesday in Israel that Microsoft is in talks for an undisclosed venture with Yahoo, but is not interested in “a whole acquisition of the company.”

Microsoft shares were up 33 cents, or 1.1 percent, at $28.58 on Nasdaq in afternoon trading. Yahoo shares were down 17 cents at $27.15 on the same exchange.

Reporting by Dane Hamilton; editing by John Wallace