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Summary:

ValueAct is a shareholder activist firm that will consult on Microsoft business going forward. It was not, however, consulted on the $7.2 billion Nokia buyout.

Danger thin ice. Keep off.
photo: Dano

So much for access. ValueAct, the activist shareholder group that’s going to get a seat on Microsoft’s board, was not consulted on Microsoft’s $7.17 billion acquisition of most of Nokia’s devices and services business. Of course, technically, ValueAct does not get its seat for another month or so, but still.

In a conference call Tuesday, Nomura Securities Analyst Rick Sherlund asked Microsoft whether ValueAct got a head’s up on this rather large acquisition. To which Microsoft EVP and General Counsel Brad Smith replied:

“The answer is no … You would not expect the company to disclose material, non-public information to an entity that doesn’t have an appropriate non-disclosure agreement, so the answer is no.”

Timing here is curious. Late Friday, Microsoft announced that ValueAct would get a board seat  — and that director could participate in the first board meeting after this November’s annual meeting. On Monday night, Microsoft announced the Nokia buyout. Now we know it was as big a surprise to ValueAct as it was to the rest of the world.

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  1. I don’t think they are inviting ValueAct onto the board because they think it’s a wise idea. It seems like it was strictly to avoid a proxy fight. I suspect MSFT will do as little as possible outside of the commitment which they made re: the board seat. Until they are on the board they have no business being informed ahead of time.

    1. i hear you. but i also think this bodes for trouble ahead.

      1. Microsoft needed to test whether ValueAct will sit in the corner quietly as it promised or not. This is the right way to test them (ValueAct).

        This is a classic war strategy move.

        Look up the 1982 Israeli invasion of Lebanon. The whole thing was a test to see if Egypt would abide by the terms of the treaty it agreed 2 a few years prior.

        You’re welcome for the lesson Barb.

        1. A rather expensive way to test ValueAct’s silence, depending on you opinion the NOK-MSFT deal economics.

          1. Actually, the original asking price was $30 Billion. It’s all a matter of perspective…

  2. The ValueAct deal was set in place on Friday. This deal happened on Monday. There was no time to even ask them so this question is stupid. The paperwork on the other deal most likely has not been finalized yet. This is stated by the “You would not expect the company to disclose material, non-public information to an entity that doesn’t have an appropriate non-disclosure agreement” comment.

    1. well as sherlund states — entering into a contract w/ someone, in this case a standstill agreement in return for board representation will mean controversy. If i were on the VA side i might think msft did not bargain in good faith. There is room for interpretation. In any case i expect rick is right — more drama to come.

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