Monday, March 28, 2016

Starboard Value Offers Alternative for Yahoo Shareholders

Starboard Value
In the face of the nearly 12 percent drop in Yahoo's market value during the last 12 months, Activist investor group Starboard Value offers shareholders an interesting choice on June 24 when it's time to elect a new board. The proposed alternate slate, includes some names familiar to the media and entertainment community such as Bridget Baker, former NBCUniversal President of TV Networks Distribution, and former DirecTV and Tribune CEO Eddy Hartenstein.

Yahoo says that the board’s Nominating and Governance Committee "will review Starboard's proposed director nominees and respond in due course."

In a letter last 25 March to other shareholders, Starboard Managing Member Jeffrey Smith says the investment firm is "extremely disappointed with Yahoo's dismal financial performance, poor management execution, egregious compensation and hiring practices and the general lack of accountability and oversight by the Board."

Smith has been a thorn in CEO Marissa Mayer's side for more than a year. Last month, after word surfaced that he might lead a proxy fight, Yahoo's board formed a Strategic Review Committee consisting of independent directors, and it hired financial and legal teams to "evaluate strategic alternatives for the company."

But Smith says that shareholders should be "highly concerned" about the review. The Internet company "appears to be demanding onerous and off-market terms" from potential bidders — including Verizon, which bought AOL last year.

"This is why we believe it is critical to elect a new Board that would provide much-needed credibility to a process that has been publicly criticized for being too slow, fraught with conflicts of interest, and very difficult for highly qualified and motivated strategic and financial buyers to access much needed diligence information," Smith says.

Starboard owns 1.7 percent of Yahoo shares. Smith previously failed in efforts to buy RealD — which this week officially merged with Rizvi Traverse Management — and to win seats on AOL's board.

Yahoo shares are flat recently but up 12 percent in the past 30 days.

The company has had little to show since Mayer took charge in 2012, aiming to revive its status as a Silicon Valley icon. She sought to beef up the company with deals including a US$ 1 billion acquisition of Tumblr and US$ 650 million for BrightRoll.

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