Activist hedge fund Starboard Value LP is going to launch a proxy fight versus Yahoo’s current board as it believes that the entire board can no longer be trusted with the company’s future, says a report from The Wall Street Journal.
Starboard is, therefore, seeking to replace the whole board of the Yahoo.
According to the Journal, activist-investor Starboard is intending to announce in the morning of March 24 that it is going to nominate nine directors to the company’s board.
Citing Starboard’s letter, the report says that the board and management have repeatedly failed in living up to their promises, “and shouldn’t be trusted with the decision on whether or not Yahoo should remain an independent company." At the moment, Starboard holds a 1.7 percent stake at Yahoo.
Once Starboard's "proxy fight" is going to win through, the odds of selling and dismantling the company becomes bigger.
Starboard is convinced that it is “extremely difficult” to turn around the business. While it wants the board to stay open minded, it thinks that there are quite a few “interested and credible buyers” for Yahoo’s core business.
Among the companies that are said to be interested to bid for the company’s core business include Time Inc., Verizon Communications Inc., IAC / InterActiveCorp. along with private equity companies TPG and KKR & Co.
Yahoo’s shareholders are given until Saturday to submit their own nominations. The election will likely be held a few months from today.
Earlier this month, a report from Reuters said that the executives of the Internet firm are scheduled to meet with Starboard, so as to discuss if they can come to a deal to veer away from a proxy fight.
According to online ad researcher eMarketer Inc., Yahoo is estimated to produce $2.83 billion in digital ad revenue within the year. This is 13.9 percent lower than what the company managed to generate in 2015.
This move from Starboard is seen as an added pressure to the current Yahoo boss Marissa Mayer. Her strategies to reignite the company’s results are by improving its focus on key areas plus enforce cost cuts.
