Just after it was revealed that Microsoft Corporation (NASDAQ:MSFT) would offer activist investment firm ValueAct Capital a board seat, we find out the company will buy Nokia’s devices division. And it turns out that ValueAct wasn’t consulted about it.
Microsoft discusses Nokia deal
The revelation came this morning on Microsoft’s conference call. Nomura analyst Rick Sherlund, who has been closely following ValueAct’s investment in the software giant, asked if Microsoft Corporation (NASDAQ:MSFT) had told the firm about its acquisition plans before offering the board seat. General Counsel Brad Smith said they did not.
“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,” Geekwire quotes Smith as saying.
ValueAct’s president joins Microsoft’s board
ValueAct President G. Mason Morfit will join Microsoft Corporation (NASDAQ:MSFT)’s board early next year and also receives the ability to discuss “significant business issues” with certain directors and managers during regular meetings. In order to secure that board seat, the firm just had to agree not to begin a proxy contest, try to push through some sort of extraordinary transaction, raise its stake in the company to 5 percent or speak badly about CEO Steve Ballmer or other executives at the company.
Forbes writer Nathan Vardi notes that ValueAct had just a .8 percent stake in Microsoft, so getting a seat on the company’s board is quite a feat. The firm even appears to have had something to do with the speeding up of Ballmer’s retirement plan.
Microsoft just wanted to shut up ValueAct?
Vardi suggests that Microsoft Corporation (NASDAQ:MSFT) was just trying to keep a muzzle on ValueAct ahead of the announcement about the deal with Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V). If so, then it’s worth questioning what ValueAct would have to say about it.
The firm undoubtedly wants to help change things for the better at Microsoft, and don’t forget that it will likely weigh in on who the company’s next CEO will be. After all, if it had enough pull to push Ballmer out earlier than previously planned, then the firm could be especially influential when it comes time to choose the next CEO.
There’s been speculation that Nokia CEO Stephen Elop would be his replacement, but that may not go over too well with ValueAct, especially if the firm would have been opposed to the Nokia deal. It’s unlikely the firm will say anything publicly about Microsoft’s deal with Nokia or what it thinks of Elop in light of its agreement with Microsoft. And besides, the activist firm has been working behind the scenes at Microsoft for some time, in stark contrast to other activists who enjoy making a public spectacle when they get involved in a company.