Yahoo Agrees A Deal With Activist Hedge Fund

Yahoo will add four new directors to its board in a new deal signed with Starboard Value.

Yahoo Inc. currently has its hands tied in front of its activist investor Starboard Value LP. According to Reuters, it is believed that the US internet company agreed a deal on Wednesday to include four new independent members to its board of directors’ panel effective immediately. Yahoo is highly pressurized by its activist hedge fund hence it is looking to avoid a proxy war ahead of its upcoming annual meeting. In order to bowing to pressure, the company recently launched an auction process for the sale of its core business just so that it does not go in a proxy war with its investor.

According to the agreement, the board of Yahoo along with the management team was under pressure from Starboard Value along with other major shareholders to settle the battle as soon as possible. Furthermore, Starboard was willing to set aside its plan for board control in favor of immediate director seats inside Yahoo. For a very long time, the activist hedge fund is looking to gain more seats in the panel so that it quickly takes the decision of Yahoo future. Last week, the search engine giant received numerous attractive bids for its core internet business and assets from various suitors.

Reuters report that making peace with its most vocal activist investor can actually help Yahoo not only this time around but throughout the auction process of its core business which is currently ongoing.

Yahoo said in a statement that Jeffrey Smith who is Starboard’s Chief Executive would join the board along with three independent directors associated with him. Yahoo's four new directors were on Starboard's slate that the hedge fund proposed last month to overthrow Yahoo's entire board.

People familiar to the matter said that both sides are looking to meet halfway in order to find a solution regarding to avoid letting the shareholders decide the fate of Yahoo’s core business. Apart from this, two sides were previously scheduled to meet last month to discuss the possibilities of avoiding proxy war however the talks did not go through as the search engine giant hired two new board members on its side at that moment.

The managing director at SpringOwl Asset Management, Eric Jackson, said in a statement “The decision point for Smith was, 'Do we want to be inside the tent when a deal goes down or do we want to be sitting on the outside hoping the board does the right thing?”