As Ballmer Exits, Microsoft Inks Deal With ValueAct That May Lead To Board Seat

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Gillmor Gang Live 08.30.13 (TCTV)

Today Microsoft announced that it has reached a “cooperation agreement” with ValueAct Capital, an investment company that had been a thorn in its side. It was said that ValueAct wanted a seat on Microsoft’s board.

Instead, Microsoft and ValueAct have come to a different agreement, in which the president of ValueAct – Mason Morfit – and Microsoft directors will meet to talk over issues relating to the company. Morfit will also be given a chance at joining the board, after the company’s annual shareholder meeting.

ValueAct owns 0.8% of Microsoft’s outstanding shares. It’s a hefty investment, one that is large enough for the investor to command the attention of the company’s board.

It was said following Microsoft CEO’s Steve Ballmer’s promise to step down within the next 12 months that ValueAct and its pressure on the company was key to his removal. It is not clear if that is the case, or pressure resulting from a massive $900 million Surface writedown, or the ensuing market shellacking of Microsoft’s stock were larger catalysts. That said, to have the news of the agreement come precisely one week following the Ballmer announcement, is more than slightly suspicious.

ValueAct is a large firm, with assets under management of $12 billion. That’s enough money to cause havoc.

Departing CEO Steve Ballmer had nice things to say about his tormentors: “Our board and management team are committed to enhancing growth and value for Microsoft shareholders, and we look forward to ValueAct Capital’s input.”

Only, I don’t think that that is true. Nice boilerplate, but I can’t imagine that Ballmer is too enthused about ceding some of his authority in his final days atop the Microsoft org chart to money folks from San Francisco.

Whatever the case, Microsoft appears to have cleaned the decks of its little investor problem.

Top Image Credit: Robert Scoble