Yahoo investor asks to weigh in on Microsoft offer

By Michele Gershberg

NEW YORK (Reuters) - An investor with a minority stake in Yahoo Inc on Thursday urged Microsoft Corp to take its most recent offer for a partial investment directly to Yahoo shareholders and prove its merits.

Mark Nelson, a partner in Mithras Capital, which owns 1.7 million Yahoo shares, said such a move by Microsoft would help shareholders gauge whether the proposal was truly superior to an advertising partnership Yahoo forged with archrival Google Inc.

"We have not been able to have our opinion heard," Nelson told Reuters. "If (Microsoft) does indeed have a superior transaction they should flesh it out."

Microsoft abandoned a $47.5 billion offer to buy all of Yahoo last month, but more recently discussed a transaction to take a 16 percent stake in Yahoo and buy its search business for $9 billion as it seeks a stronger foothold in online advertising. Talks broke down last week.

Microsoft said its alternate deal was still open for discussion, though Yahoo maintains that selling its search business would be tantamount to giving up on future growth in the wider online advertising market.

"It is our strong belief that there is an ideal solution to Microsoft's current impasse with Yahoo: Microsoft must take its 'alternate transaction' ... directly to Yahoo shareholders via the upcoming proxy vote," Nelson wrote in a letter he said was e-mailed and faxed to Microsoft Chief Executive Steve Ballmer.

Yahoo faces a proxy battle against billionaire investor Carl Icahn ahead of its annual shareholders meeting on August 1.

Icahn proposed a full slate of nine directors to replace Yahoo's current board, though he initially launched his proxy battle to act as a catalyst for a Microsoft takeover deal.