Yahoo better get ready for a fight. Frustrated with the Sunnyvale, California company’s declining performance, activist investor Starboard Value plans to wage a proxy battle to replace Yahoo’s entire board of directors.
The Wall Street Journal reports Starboard will announce on Thursday (March 24) that it will nominate nine directors to the board. A Yahoo representative declined to comment.
According to a letter WSJ reviewed, Starboard blames Yahoo’s management and board of directors for failing to live up to their promises. Starboard had pressured Yahoo to abandon the spinoff of its stake in Alibaba when it became unclear if the transaction would go through tax-free. Starboard is also leading the charge in pushing Yahoo to sell the core business. In a Jan. 6 letter, it warned: “If the Board is unwilling to accept the need for significant change, than an election contest may well be needed.”
Another activist investor, Eric Jackson at SpringOwl Asset Management, believes Starboard has an agenda. Jackson in December presented a 99-slide deck laying out a detailed plan for turning around Yahoo that included cutting costs, staff, and CEO Marissa Mayer. In the presentation, he said that Starboard, having acquired half of its $200 million stake when the stock was low, has an incentive to see a quick sale. SpringOwl is not a major shareholder, but Jackson has also threatened a proxy fight. The deadline to file is March 26.
If all this sounds a bit familiar, perhaps it’s because Dan Loeb’s Third Point waged a proxy battle in 2012 that got him and two allies on the board. In that case, Loeb also played a key role in hiring Mayer.