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Starboard Issues Another Letter, Imploring Yahoo

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Activist hedge fund Starboard Value LP, which owns a significant stake in Yahoo! Inc. (NASDAQ: YHOO) and AOL, Inc. (NYSE: AOL) issued another letter addressing Yahoo’s CEO Marissa Mayer, in which it expressed concerns over recent media reports. These reports highlighted Yahoo's interest “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 on this recently and also voiced his opinion.

Positioning The New Letter In The Broad Scene

“Remember, Starboard sent a letter previously [to] 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, [what] 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 [...] a tax-free nature of that as opposed to -- at some point when they do sell it -- potentially having to pay taxes on it.”

Related Link: CNBC Says Starboard Value Wants To Merge Staples, Office Depot

The Meat Of The Letter

Faber also added, “They 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,'” Faber concluded.

Posted-In: darden David Faber Jeffrey Smith Marissa Mayer Starboard Value LPCNBC Media


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