Yahoo! Inc. announced its board has launched a committee of independent directors that hints at a possible sale. The strategic panel will look at strategic alternatives as the Internet media giant is looking to appease impatient investors.
Yahoo Could Seek Sale
Is it the beginning of the end of a firm that has been around since the early days of the Internet? Is Yahoo buying time or is something really about to happen? That’s what many investors and analysts are wondering after the Internet titan said it’s forming a panel to explore its options.
In addition to looking at its options, the panel will seek out and engage with strategic and financial parties interested in working together. Those close to the situation tell Reuters that the firm’s advisers have begun to work on a sale process. Earlier this month, sources say, Yahoo met with parties individually without creating a formal auction process.
Reports also say that Yahoo! Inc. is mulling over a plan to split its operating businesses from its 15 percent stake in the big Chinese Internet firm, Alibaba.
Whatever the case may be, experts note that this is a strong sign that CEO Marissa Mayer and the board are open to the idea of selling the firm. For years, there have been signs that Yahoo would be posting a “for sale” sign, but it still kept the doors open.
The board issued a statement Friday and said the firm is “thoroughly committed to exploring strategic alternatives while simultaneously supporting management and the employees in their implementation of Yahoo’s strategic plan.” The board added: “We believe that pursuing these complementary paths is in the best interests of our shareholders and will maximize value.”
Mayer, who has been in charge for more than three years, has disappointed shareholders. Rather than selling the firm, Mayer has insisted on streamlining the firm and selling different parts of Yahoo. But observers say there are many challenges facing the website.
Year-to-date, shares are down a little more than six percent at around $31 a share. However, over the past five years, shares have climbed roughly 75 percent.
Yahoo’s Proxy Fight With Starboard Value LP
This comes as Yahoo! Inc. is facing a potential showdown with activist investor Starboard Value LP.
It’s reported that Starboard, which owns about 0.75 percent of the firm, is starting to begin a proxy fight with Yahoo. Starboard has been urging Yahoo since 2014 to separate its Asian assets and to sell the core business.
Late last year, Starboard CEO Jeff Smith penned an open letter to Yahoo management to start overhauling its leadership strategy. Smith noted that the “market has a dim view of the company’s current strategy, and selling the Core Business now is the best outcome for Yahoo shareholders.”
With the nomination of board members on the horizon, it’s widely expected Starboard to lobby the picks of new members. A change could come as early as this month.
Starboard has been successful in the past. It has prompted executive changes in a number of firms, including Darden Restaurants Inc. (NYSE:DRI). It also lobbied for Office Depot Inc. and Staples Inc. (NASDAQ:SPLS) to merge.