Bloomberg News

Microsoft Rises as ValueAct Discloses $1.9 Billion Stake

April 22, 2013

Microsoft Corp. (MSFT), the world’s largest software maker, rose the most in a year after activist investor ValueAct Holdings LP amassed about a $1.9 billion stake.

The shares increased 3.6 percent to $30.83 at the close in New York, the biggest gain since April 20, 2012 and the highest closing price since Sept. 21. The shares have advanced 15 percent this year, compared with a 9.6 percent gain for the Standard & Poor’s 500 Index.

Microsoft Chief Executive Officer Steve Ballmer is working to deliver more software and services over the Internet to bolster sales amid a global PC slump that’s eroding demand for pre-installed programs. ValueAct, which has a history of investing in companies it believes are fundamentally undervalued, said that Microsoft can succeed in this effort, aided by the Azure cloud-computing platform.

“In three to five years, which is our time horizon, we’ll stop talking about PC cycles and instead talk about Microsoft as the largest cloud-computing company in the world,” ValueAct CEO Jeffrey Ubben said today at a conference in New York.

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Microsoft said in an e-mailed statement that its board and executives “welcome the perspectives of shareholders.” The Redmond, Washington-based company also said it’s committed to “enhancing value for all shareholders.”

Microsoft would become ValueAct’s biggest holding, topping its $1.6 billion stake in Motorola Solutions Inc. as of Dec. 31, according to data compiled by Bloomberg. ValueAct manages more than $10 billion in assets, according to its website.

Top 20

Ubben said ValueAct had almost 60 million shares, valued today at about $1.9 billion. That would put ValueAct among the top 20 biggest investors in Microsoft, according to data compiled by Bloomberg.

In March, industrial equipment maker Gardner Denver Inc. (GDI:US) agreed to sell itself to KKR & Co. for about $3.7 billion after ValueAct became Gardner Denver’s third-biggest shareholder and pressed for a deal. Another shareholder is now suing Gardner Denver saying the deal undervalues the company.

“They’re value investors who don’t mind being activists,” Colin Gillis, an analyst at BGC Partners, said in an interview. “If things aren’t working out, they would become more active.”

ValueAct only plans to engage Microsoft’s board over time if they’re unhappy, CNBC reported earlier.

To contact the reporters on this story: Dina Bass in Seattle at dbass2@bloomberg.net; Saijel Kishan in New York at skishan@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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