By Douglas MacMillan And David Benoit 

The pressure on Yahoo Inc. chief Marissa Mayer to make a bold move intensified Friday with a new challenge from an activist investor experienced in fighting tech companies.

In a letter sent to the CEO, Starboard Value LP revealed it has taken a stake in Yahoo and pushed the company to reduce costs, explore a combination with AOL Inc. and spell out plans for its Asian assets. Starboard didn't say how much it had invested in Yahoo.

Starboard is voicing the loudest objection to Ms. Mayer in the more than two years since she took the reins at Yahoo, a period in which the Internet portal has failed to grow its core advertising business and struggled to reinvent itself in an age of social networks and mobile computing.

In a statement Friday, Ms. Mayer said Yahoo will review Starboard's letter and is committed to delivering value to shareholders.

Starboard's letter also puts into focus the question of how Yahoo should deploy the more than $5 billion it will receive from selling a portion of its stake in Alibaba Group Holding Ltd.

Yahoo's finance chief, Ken Goldman, has committed to returning at least half of that amount to shareholders through a buyback or dividend. Along with $1.55 billion in net cash, that would leave Yahoo with some $4 billion to spend on one or more acquisitions with the goal of accelerating growth.

An acquisition of AOL, with a current market value of $3.5 billion, could fall just within Yahoo's budget. That tie-up could help Yahoo bolster its advertising technology and create a stronger third competitor in the online ad market dominated by Google Inc. and Facebook Inc. But it would also combine two aging Web businesses that are struggling to adapt to new consumer behaviors.

"It's buying more of what they already have," said James McQuivey, an analyst at Forrester Research.

AOL declined to comment. Yahoo shares rose 4% Friday, while AOL gained 3.7% following the news.

Jacqueline Reses, Yahoo's merger chief, ruled out the possibility of an AOL acquisition in comments she made at a technology conference in July. When asked if she thought AOL would be acquired in the next two years, she said, "Not by us."

In Friday's statement, Ms. Mayer said she would update investors on how Yahoo plans to spend money when it reports quarterly earnings, likely in October.

Ms. Mayer is likely to draw on the support of a board composed mostly of directors added during her tenure. Not counting Ms. Mayer, five of the eight other board members were brought on while she was CEO, including Yahoo co-founder David Filo, who she has worked closely with on company culture and technology; Lee Scott, with whom she served on the board of Wal-Mart Stores Inc.; and Max Levchin, a fellow Silicon Valley technologist.

Starboard first gained wide public recognition for its bruising 2012 fight with AOL. After months of bitter public letters, the activist investor lost a campaign to gain board seats but exited its position with a profit.

Starboard, which manages more than $3 billion in assets, according to a person familiar with the matter, has in recent years filed more activist positions than any other firm, but typically it targets smaller companies than Yahoo.

The investor is also in the middle of a proxy fight with Darden Restaurants Inc. and on Thursday won the support of two influential proxy-advisory firms in its bid to unseat the restaurant operator's 12-person board. It owns an 8.8% position in Darden worth $400 million, its largest position to date.

Starboard didn't reveal its position in Yahoo, but the lack of a regulatory disclosure means it is likely to be less than 5%. Activists have shown the ability to target larger companies like Yahoo, which has a $40 billion market capitalization, with smaller stakes. It would only take about a 1% stake at Yahoo to be a top 10 shareholder.

Starboard believes a combination with AOL would realize $1 billion in savings and, among other things, could help Yahoo cope with the weakness in the market for online display ads--the banners that run on websites. These ads have long constituted Yahoo's core business, but are now less desired by advertisers who can choose from an array of digital, mobile and social media inventory. As a result, display ads have been falling, leading to Yahoo's revenue dropping 3% in the second quarter, its fourth decline in the past five periods.

AOL has demonstrated in its last few quarters an ability to get advertisers to pay higher rates for "premium" or high-end display ads. The company has also made a push into "programmatic" advertising, offering online marketers and publishers automated tools and software aimed at making their advertising more efficient and precise. Yahoo has lagged in this area--some marketers view its ad technology as outdated and subpar.

A tie-up, however, would present integration challenges and wouldn't solve one of the major dilemmas facing both companies: users and advertisers are shifting to mobile devices, where the advantages of AOL's and Yahoo's large Web audiences no longer apply. Both companies have started selling mobile ads but neither is making a significant enough portion of revenue from them to break it out in earnings results.

Should Ms. Mayer reject Starboard's proposal to merge with AOL and cut costs, she will have to pitch investors on an alternative plan soon, said Eric Jackson, founder and managing director of Ironfire Capital, which owns shares in Yahoo.

"Marissa knows that within four months from now, if she does nothing, Starboard will probably seek a short slate of directors to be elected to the Yahoo board for the next June meeting," Mr. Jackson said. "And they'll have a good chance of being successful."

Part of Ms. Mayer's plan may lie in acquiring a large tech startup. In recent weeks, the company has reached out to venture capitalists to learn about which companies might be interested in a sale, according to people who were contacted by Yahoo. "They are asking 'what big companies should we buy?'," one of the people said.

Starboard criticized Yahoo's acquisition strategy, saying Ms. Mayer has spent at least $1.3 billion on highly valued startups. The deals during her tenure include three dozen small acquisitions, ranging from an e-commerce analytics tool to a Web browser to an image-recognition company.

"We do not believe the company should be pursuing acquisitions of companies at high multiples of revenue as it has done repeatedly in the past," Starboard said in its letter.

Ms. Mayer has said the company relies on acquisitions to add small teams of engineers who can build new products that will attract users and, eventually, advertisers.

Yahoo is also researching ways to avoid paying taxes when it sells its remaining stake in Alibaba. That stake is currently valued at $21.5 billion, if Yahoo paid taxes at the current 38% capital-gains rate.

A tax-avoiding maneuver could involve acquiring a foreign asset or doing a complicated arrangement called a cash-rich split, where one of its Asian partners acquires a U.S. company and then transfers the asset to Yahoo in exchange for its remaining shares in Alibaba or Yahoo Japan.

Yahoo is no stranger to activism. Daniel Loeb's Third Point LLC owned more than 5% in 2012 when it ousted CEO Scott Thompson, gained board seats and supported the appointment of Ms. Mayer. Third Point eventually stepped down from the board and exited its position.

In 2008, Carl Icahn also took a more than 5% stake in Yahoo, gained board seats and pushed it to sell itself to Microsoft Corp. in a deal that ultimately fell apart.

Mike Shields and Lauren Pollock contributed to this article.

Write to Lauren Pollock at lauren.pollock@wsj.com

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