Starboard Issues Another Letter, Asks Yahoo To Refrain From 'Big Acquisition' And 'Combine' With AOL

Activist hedge fund Starboard Value LP, which owns a significant stake in Yahoo! Inc. YHOO and AOL, Inc. AOL issued another letter, addressing Yahoo’s CEO Marissa Mayer, in which it expressed concerns over recent media reports that highlighted that Yahoo is interested “in doing large-scale acquisitions” and also suggested that the company “should be considering a combination with AOL.”

Related Link: Yahoo, AOL Rally Following Starboard Letter

CNBC’s David Faber reported about this recently and also opined on what

“Remember, Starboard sent a letter previously that the activist hedge fund, run by Jeffrey Smith, I haven’t had an opportunity to speak with Mr. Smith this morning on this. We know them from Darden certainly and many other situations, big holder in AOL,” Faber said.

He continued, “The last time we heard from them was when they were trying to get Yahoo to consider the idea of splitting the company and doing I think, was a reverse […] sending out the core business into AOL, all of this to try to free up essentially the Alibaba and the Alibaba stake to preserve tax-free, a tax-free nature of that as opposed to at some point when they do sell it potentially having to pay taxes on it.”

Faber also added, “They [Starboard] are basically coming out and saying, we keep hearing you may do a cash-rich split-off to separate the non-core minority ownership stakes, namely Yahoo Japan and key of course Alibaba and for its part Starboard is saying – we don’t believe that that is the best way to go about creating value.”