Activist Investor Pushes Marissa Mayer to buy AOL

Yahoo CEO Marissa Mayer during the International Consumer Electronics Show in Las Vegas on Jan 7, 2014

Yahoo CEO Marissa Mayer during the International Consumer Electronics Show in Las Vegas on Jan 7, 2014

Activist investor Jeffrey Smith, in a letter on Friday urged Yahoo Inc. to buy AOL Inc. and to head in a direction where they can reduce future taxes on the company’s stake in China’s Alibaba Holdings Group. He likewise rebuked Marissa Mayer, CEO of Yahoo for spending $1.3 billion to acquire Tumblr and more than two dozen different startups during the last two years with little returns coming in the name of the company.

Smith furthermore said that he has built a “huge” stake in Yahoo through Starboard Value LP. The size of the stake wasn’t provided in the letter and hasn’t yet been unveiled in regulatory filings.

Investors and analysts believe that Yahoo and AOL getting together would allow the merged entity to reduce costs, attract a huge user base, and above all, fortify their internet advertising arm to fight against rivals such as Google Inc. and Facebook Inc.

“It makes a lot of sense,” said BGC Financial Partners Colin Gillis.

In a statement, Mayer said she looked forward to discussing Smith’s ideas. “Going forward, we have great confidence in the strength of our business,” Mayer said.

In 2012, Smith campaigned for change at AOL after he procured a 5.3 percent stake in the company and ran an unsuccessful campaign to win three board seats. He didn’t express any enthusiasm toward attempting to replace anybody on Yahoo’s nine-member board, which also includes Mayer.

This is the third time in the previous six years that an activist investor has focused on Yahoo for a shake-up. Carl Icahn grabbed three spots on Yahoo’s board in 2008 after criticizing the company for rejecting a $47.5 billion takeover offer from Microsoft Corp. Hedge-fund chief Daniel Loeb additionally received three board spots in 2012 in the wake of coordinating the dismissal of one of Yahoo’s past CEOs, Scott Thompson.

Since Mayer took over as Yahoo’s CEO in July 2012, Mayer has been acquiring startups and popular internet services, for example, Tumblr in a move to engage with a more youthful demographic and spread out Yahoo’s user base on smartphones and tablets as more users utilize mobile devices to connect to online services.

With AOL’s user base filled out of individuals who relied on dial-up modems to surf the Web, Mayer may see a buyout to be “too backward-looking for Yahoo,” Gillis said.

Yahoo could undoubtedly take over AOL, whose market value is currently esteemed somewhere near $3.5 billion. Excluding taxes, Yahoo is expected to receive $6 billion from selling 140 million of its shares in Alibaba, which recently made history with the biggest IPO in the history of America.

Carrie Ann
Carrie Ann is Editor-in-Chief at Industry Leaders Magazine, based in Las Vegas. Carrie covers technology, trends, marketing, brands, productivity, and leadership. When she isn’t writing she prefers reading. She loves reading books and articles on business, economics, corporate law, luxury products, artificial intelligence, and latest technology. She’s keen on political discussions and shares an undying passion for gadgets. Follow Carrie Ann on Facebook

Leave a Reply

Your email address will not be published.

Recent Posts

Juul Products Banned – Will The FDA Win The Battle?

Juul Products Banned – Will The FDA Win The Battle?

In a written statement, FDA Commissioner Robert M. Califf stated, “Today’s action is further progress on the FDA’s commitment to ensuring that all e-cigarette and electronic
2 days ago
The Mark Cuban Cost Plus Drug Company Takes on Big Pharmas

The Mark Cuban Cost Plus Drug Company Takes on Big Pharmas

Commonly used generic drugs are available at a 15% markup, plus a $3 dispensing fee and $5 shipping fee. In an interview with PBS News, Cuban told the host that the Mark Cuban phar
2 days ago
The Brookfield Global Transition Fund Promises Net Zero Returns

The Brookfield Global Transition Fund Promises Net Zero Returns

According to a written statement issued by the company, they have already deployed $2.5 billion to fund decarbonization technologies in the US, the UK, Germany, and North America.
2 days ago
Network Configuration Error Causes Cloudflare Outage Across 19 Locations

Network Configuration Error Causes Cloudflare Outage Across 19 Locations

The Cloudflare outage was most problematic for users of Cloudflare’s DNS lookup service. “Customers attempting to reach Cloudflare sites in impacted regions will observe 50
3 days ago
Tesla Employee Lawsuit Alleges Violation of Federal Law Amidst Layoffs

Tesla Employee Lawsuit Alleges Violation of Federal Law Amidst Layoffs

Tesla laying off employees has impacted workers across divisions from human resources to engineering. The plaintiffs are seeking 60 days of compensation and benefits for all those
4 days ago
Nasdaq’s Opening Bell Ushers in a Metaverse Moment for Women

Nasdaq’s Opening Bell Ushers in a Metaverse Moment for Women

Back in 2020, she wrote a feature for Forbes, where she confidently penned that a new era will herald all good things metaverse, she asserted that it “will unleash amazing creati
4 days ago