Despite sales talk, CEO Mayer is pushing another turnaround effort.
Canyon Capital Advisors has joined a growing chorus of activist shareholders pushing Yahoo Inc. to sell off its core business in a more expedient fashion. Canyon, a Los Angeles-based hedge fund, officially joined Starboard Value and other shareholders in making the push for a sale when it fired off a letter to Yahoo’s board in late February expressing concerns about perceived conflict between the company’s management and board in regard to a potential sale.
Amid growing pressure from shareholders, Yahoo’s board announced its intentions to explore the sale of the core business even before Canyon Capital’s letter was sent. The company announced its board had formed a committee to explore “strategic alternatives” and had secured help from investment banks and a law firm to provide process oversight.
Calls for a sale have become more vocal in recent months following about three years of flagging efforts on the part of CEO Marissa Mayer to pull off a turnaround for the Internet giant. Mayer has focused on Yahoo’s mobile apps and has been working to increase advertising revenue. Her efforts so far have produced lackluster results.
The board’s move to explore its options comes even as Mayer is in the midst of another turnaround plan. This time the CEO is focusing on the company’s “Mavens,” mobile, video, native and social platforms. Yahoo is also enacting cost-cutting measures and has announced plans to close five offices and cut 15% of its workforce by year’s end.
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The board’s decision to explore its sales options even as Mayer works on a turnaround may not be enough to stop Starboard’s founder, Jeffrey Smith, from launching a proxy fight. In a Jan. 6 letter to the board, Smith stated an “election contest may very well be needed so that shareholders can replace a majority of the Board with directors who will represent their best interests,” Reuters reported.
The board’s decision to bring on Goldman Sachs, JPMorgan Chase and PJT Partners to assist with exploring a sale is seemingly at odds with Mayer’s latest turnaround plan. The move gives credence to those who say the two sides have differing views for the company’s future. Whether Mayer’s plan will produce results quickly enough to placate shareholders, or if the board’s decision to explore a sale will be enough to hold off a proxy battle remains to be seen. Investors have until March 26 to nominate a director or group of directors to serve on the board. The annual shareholder meeting is expected to take place in May.
Verizon Communications, now the owner of AOL, is reportedly one of the companies interested in snapping up Yahoo’s core ventures.
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