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 Eric Jackson, managing director at New York-based SpingOwl Asset
Management, which sent a 99-page strategic analysis to Yahoo's board
on Friday, said in an interview that the activist hedge fund has
several people in mind to replace Mayer but is not yet backing one
candidate.
Jackson is among the growing list of Yahoo shareholders who are
voicing their frustration with Mayer and calling for a different
path than the one Yahoo recently laid out.
"(Former Yahoo interim CEO) Ross Levinsohn was passed over for the
job four year ago. I think the basic strategy that he was advocating
was in hindsight the right strategy," Jackson said.
He added that Reses, who was formerly chief development officer at
Yahoo and left for payment processor Square in the fall, is
interesting because she is familiar with the company and also has a
private equity background, having worked at Apax Partners before
joining Yahoo.
"Whoever is the next CEO will need to take Yahoo core down to its
studs in terms of its costs," Jackson said.
Yahoo declined to comment.
Yahoo shelved plans to spin off its stake in Chinese e-commerce
giant Alibaba Group Holding Ltd last Wednesday, under pressure from
investors - including activist Starboard Value - worried about
billions of dollars in tax liabilities that could weigh on the value
of the entity.
The company said that it would, instead, look at creating a separate
company to hold the rest of its assets, in a strategy it is calling
a "reverse spin" of its original plan.
According to a person familiar with the matter, Mayer has the
support of Yahoo's board and will be given time to work through the
new plan to carry out the reverse spin. Due to the complex nature of
the plan, however, it could take at least a year to finish.
Starboard Value and other shareholders are unlikely to share the
board's patience and have have written letters to the Yahoo board,
voicing their opposition to the company's current path.
SpringOwl, a roughly $300 million fund managed by activist investor
Jason Ader, is pushing Yahoo to cut costs and bring in a strategic
partner such as Liberty Media to help deal with tax issues. SpingOwl
has not revealed the size of its stake in Yahoo.
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SHAREHOLDER URGES SALE OF COMPANY
Canyon Capital Advisors LLC, which owns about 1.1 percent or 10
million shares in Yahoo, said in a letter dated Dec. 11 that the
company should pursue a sale of the whole company or its various
assets as soon as possible. Canyon feels that the company, by saying
it will spend a year to evaluate the spinoff of the core business,
is wasting too much time while its business erodes.
Another top shareholder who spoke with Reuters who did not want to
be named, said that after the company announced the reverse spin
plan, the fund wrote a letter to the board saying it should proceed
to sell the core business instead.
Starboard originally agitated to have Yahoo sell its stake in
Alibaba but then changed its view that the company should put its
core business up for sale after the U.S. Internal Revenue Service in
September denied a request for a ruling on whether the spinoff would
be tax free.
Starboard has indicated that it is willing to launch a proxy fight
ahead of the company's annual meeting this spring if it is unhappy
with Yahoo's performance.
(Reporting by Liana B. Baker and Mike Flaherty; additional reporting
by Deborah Todd; Editing by Cynthia Osterman)
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