Yahoo!

Shareholder Tells Yahoo: Stop the Large-Scale Acquisitions

2 min read
This story originally appeared on CNBC

Activist investor Starboard Value delivered a letter to Yahoo's board expressing concern over reports that the company may be considering a large-scale acquisition.

Recent news articles had suggested Yahoo was interested in acquiring Scripps Networks, or a tie-up with AOL. Although in showing concern about the Scripps reports, the activist firm reconfirmed its push for an AOL combination.

Starboard stressed in its letter that Yahoo should monetize noncore minority equity investments, and that it should significantly reduce costs to improve profitability.

"Within the past week, new speculation has emerged that Yahoo is considering a cash-rich split-off as a structure to separate its noncore minority equity interests. The resurfacing of rumors about a cash rich split-off at this juncture is particularly troubling given your acknowledgment ... that this option would be clearly inferior to a spinoff structure or other available alternatives to unlock the full value of the stakes in Alibaba and Yahoo Japan," Starboard wrote in its letter.

Starboard, which first expressed similar views on a Yahoo-AOL combination in September, disclosed a 7.7 million-share stake in Yahoo and a 1.9 million-share stake in AOL in November.

The activist firm concluded its letter with a challenge to Yahoo's executive team.

"Should you instead choose to proceed down a different path by pursuing large acquisitions and/or a cash-rich split, both of which have been speculated, such actions would be a clear indication to us that significant leadership change is required at Yahoo," Starboard wrote. "We hope our concerns are unfounded and would like to continue our constructive dialogue."

Yahoo's shares were up 1.4 percent at $49.28, while AOL was up 3 percent at $47.52 in early trading Thursday.

Yahoo did not immediately return a CNBC request for comment.

—Reuters contributed to this report.

More from Entrepreneur

David provides constructive insight to help businesses focus on their company growth, build brand awareness and know when and how to raise money.
Jumpstart Your Business. Entrepreneur Insider is your all-access pass to the skills, experts, and network you need to get your business off the ground—or take it to the next level.
Starting, buying, or growing your small business shouldn’t be hard. Guidant Financial works to make financing easy for current and aspiring small business owners by providing custom funding solutions, financing education, and more.

Latest on Entrepreneur