Yahoo announced today that it has reached an agreement with the hedge fund Starboard Value, a shareholder that has been calling for a massive overhaul of the company’s board. It will add four directors nominated by the fund, including its CEO, Jeffrey Smith, in a move that will likely ensure that Yahoo is either sold or broken up.
In March, Smith wrote a letter to Yahoo investors saying that management and the board have “have repeatedly failed shareholders” in running the company and in deciding its fate as a standalone public company.
Yahoo CEO Marissa Mayer, in a press release, called the agreement a “constructive resolution.” Smith echoed the sentiment, adding: “We look forward to getting started right away and working closely with management and our fellow board members with the common goal of maximizing value for all shareholders.”
Starboard previously pressured Yahoo to not spin off its stake in the online retailer Alibaba, when it became unclear as to whether a sale would have tax consequences. Starboard has also been leading the charge for Yahoo to sell its core business, and with four of its hand-picked directors now sitting on Yahoo’s board, that seems a likely outcome for the struggling internet giant.
Starboard won’t have the majority in Yahoo’s board—which will now comprise 11 members—but it’s brought on people with history in large-scale mergers and acquisitions.
Starboard has a history of this kind of activism: It has waged similar battles against companies like AOL, Staples, and Darden Restaurants. According to FactSet, Starboard has battled for 105 board seats across multiple companies, and has won 66.
Yahoo in March also added two other board members with deal-making experience, according to The Wall Street Journal (paywall).