Starboard Once Again Throwing Around Its Weight, Starts Fight To Oust Yahoo Board

Image courtesy of Morton Fox

Activist investors at Starboard Value are once again looking to shake things up at a major company. After essentially forcing the now-contested Staples-Office Depot merger, questioning the number of breadsticks handed out at Olive Garden and ousting the entire Darden Restaurant Inc. board, the investor group has launched a fight to remove the entire board of Yahoo. 

Reuters reports that Starboard began a proxy fight on Thursday to remove the board, including CEO Marissa Mayer, and nominate its own nine candidates for the board.

The fight comes after the investor group has been very vocal about its desire for Yahoo to get out of the internet business.

Starboard has pushed for the company to auction its core business — including search, mail, and news sites — possibly to private equity firms. Yahoo launched an auction in February after ditching a plan to spin-off its stake in Alibaba, Reuters reports.

Some Yahoo investors had previously pushed for a merger with AOL, but that option went “poof” last year when Verizon acquired that other web 1.0 relic for $4.4 billion. Before that, there was talk of an acquisition by Microsoft that never came to fruition.

“We have been extremely disappointed with Yahoo’s dismal financial performance,” Starboard said in a letter to Yahoo, noting that the company’s desire for a proxy fight was initiated in order to ensure the sale of the company’s business went smoothly.

Starboard said it remained open to discussions with Yahoo and was hopeful that it could reach an agreement to get involved with the company.

Yahoo tells Reuters that it will review Starboard’s nominees.

The company and the investor group could still come to an agreement on the business’s future before a scheduled June annual meeting, Reuters reports, adding that any agreement would hinge on Yahoo’s willingness to give up its board.

However, if the groups can’t avoid a proxy fight and the Yahoo board election is taken to a shareholder vote, analysts expect decisions to fall to the large mutual and index funds that own the stock.

“We think everyone getting into the stock over the past six months, and most of those easing their way out, will all side with Starboard,” Don Bilson, head of event-driven research at Gordon Haskett, an independent research firm, tells Reuters.

News of the proxy fight is just the latest incident in which Starboard has been able to flex its muscle and push around companies.

In late 2014, the activist group began pushing — via strongly worded letters — for an Office Depot, Staples marriage. At that time, Starboard had recently taken a 5.1% stake in Staples and increased its existing holding in Office Depot by about 10%.

Before that, the company roundly mocked Olive Garden and then seized seats on its parent company’s board of directors.

Starboard launches proxy fight to remove entire Yahoo board [Reuters]