The second largest shareholder in Yahoo! has claimed that Microsoft made a blunder with its latest ultimatum letter.

Investment firm Legg Mason has said it would support Yahoo’s independence if Microsoft maintained or lowered its current bid, the Wall Street Journal has reported.

"Telling the shareholders you’re going to take something away from them is not a way to get their support," Seeking Alpha claims portfolio manager at the firm Bill Miller told the journal.

However, Search Engine Land reports that a study of 20 institutional investors by investment firm Piper Jaffray found that the majority favour the current offer over no deal at all.

Microsoft’s initial bid for the firm stood at $31 (£15.70) per share, but Mr Miller does not believe that this will be the final takeover offer for the search engine and believes that favour could be won through an increase of $1 per share on the offer price.

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