Yahoo has buy back around $2 billion and $4 billion of shares to bolster defense against activist investor, Starboard Value LP.
Alibaba Group and Yahoo are two of the biggest tech companies in the industry. Recently, Yahoo announced that it is planning buy back its own shares worth $2 billion with proceeds received from the latest public offerings of Alibaba Group Holding. Wall Street Journal reported that Yahoo seeks to boost its buy back authorization by $2 billion. This plan will allow the CEO of the company to bolster its defense against activist investor.
The president and CEO of Yahoo (YHOO) Marissa Mayer’s believes that the boost in buy back authorization by $2 billion will help the company to widen its efforts in unlocking value from its Asian assets thus return the cash to shareholders. Since 2012, the company has buy back almost $9.7 billion in alibaba stock. Moreover, it has told about the plans to spin off its remaining stakes in Alibaba earlier this year. “The Board of Directors of Yahoo! Inc. (the “Company”) approved an additional share repurchase program of $2.0 billion (the “New Repurchase Program”) which will expire on March 31, 2018,” said Yahoo in an SEC filing on Thursday.
According to sources, it is said that these additional buy backs will strengthen the stance of the CEO of the company Marissa Mayer Moreiver, Marissa Mayer is currently planning to bolster its defense against activist investor Starboard Value LP. It is believed that the “activist” investor supposedly “took a position” in the company in 2014. The investor argued that the CEO has reduced the investor value by spending more than enough on acquisitions. Starboard Value LP has already acknowledged Marissa Mayers about its feelings in a letter sent to her this month. It reiterated that the company ‘must’ cut costs, buy back its shares worth $4 billion, and spin off its remaining stakes in Yahoo Japan.
Sources tell that the shareholders have until Friday to submit their nominees for the board of Yahoo. Starboard Value LP’s spokesman could not comment immediately regarding this matter. Moreover, the company’s intentions are still unclear in its latest letter. It is still unknown whether the activist wants a leadership which it wanted before the announcement of Alibaba spin off.
Currently, Yahoo is going through a very rough phase. It is trying to revive its business and become what it was in the past. The company has kept on failing despite of various acquisitions it has made in the past. Ever since Marissa Mayers ‘took the reins’ at Yahoo, the company has failed to make any mark with its core advertising business as well as it is facing difficulties to revamp its business completely by renewing its strategies.