Legg's Miller undecided on Icahn's Yahoo slate

By Dane Hamilton

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: Quote, Profile, Research) backed by billionaire investor Carl Icahn.

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: Quote, Profile, Research) 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: Quote, Profile, Research), 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.