Yahoo Inc. is facing new pressure from investor groups who
oppose giving Chief Executive Marissa Mayer more time to show
progress on her turnaround.
Canyon Capital Advisors LLC, a Los Angeles investment firm that
ranks among Yahoo's 15 largest shareholders, sent a letter to the
board Friday urging it to find a buyer for its core Internet
business or the entire company, according to a document reviewed by
The Wall Street Journal.
Another Yahoo investor, New York hedge fund SpringOwl Asset
Management LLC, is proposing a new plan to slash the company's
workforce by 75%, replace Ms. Mayer with an operations-focused CEO
and bring in a strategic partner to help Yahoo navigate the tax
issues surrounding its Asian assets.
Investor dissent is mounting in the wake of Yahoo's announcement
last week to shelve a plan to spin off its shares in Alibaba Group
Holding Ltd. due to potential tax risks and instead explore a
spinoff of its core Internet business. If the company proceeds with
that plan, the maneuver could take more than a year, extending a
turnaround attempt that has so far failed to produce signs of
growth.
Ms. Mayer on Wednesday said she would announce a more detailed
reorganization plan on the fourth-quarter earnings call next month.
Investors have sent Yahoo's shares down 5.6% since Wednesday's
announcement.
Without a clear strategy from management, some investors are
sending their own proposals to Yahoo's Sunnyvale, Calif.,
headquarters to pressure the board to set a more precise
course.
A Yahoo spokeswoman declined to comment.
The wide variance between the proposals put forth by Canyon
Capital, SpringOwl and Starboard Value LP, the activist investor
who has pressured Yahoo over the past year, highlights the
different directions the Internet business could go if it chooses
to abandon Ms. Mayer's turnaround.
"I disagree with this notion that Yahoo can't be fixed," said
Eric Jackson, managing director of SpringOwl, which has $300
million in assets under management, including an unspecified stake
in Yahoo.
Mr. Jackson said he has sent Yahoo's board a 99-page slide
presentation which details a plan to turn around the struggling
Internet business by slimming it down and focusing on a few areas
where the company excels, such as its sports and finance sites.
He proposes cutting as much as $2 billion in annual costs by
laying off 9,000 of the company's 11,900 employees and contractors,
eliminating perks like free food, selling its iconic headquarters
and leasing back only the office space it needs.
The investor is calling for new management, led by an executive
with strength in operations, and suggesting that a strategic
partner buy a stake in Yahoo through a private investment in public
equity, or PIPE, deal and act as an adviser on the tax issues tied
to its stakes in Alibaba and Yahoo Japan. Liberty Media, the
investment group led by John Malone, would be an ideal partner, Mr.
Jackson said.
Liberty Media didn't immediately respond to a request for
comment.
Mr. Jackson estimates Yahoo could fetch about $6 billion if it
sold its core business today. With cost cutting and improvements to
profitability, he predicts it could eventually be acquired for more
than $24 billion.
SpringOwl isn't a major shareholder in Yahoo, but Mr. Jackson
said he has met with several of the company's largest investors to
build support for his plan. He hopes to pressure Yahoo's board
publicly, using his 67,000 Twitter followers, but will also
consider waging a proxy fight.
Any proxy challenges would have to be filed by March 26,
according to a Yahoo regulatory filing.
A separate challenge is emerging from investors who want Yahoo
to sell now. In its Dec. 11 letter to Yahoo's board, Canyon
Capital, which owns about 10 million shares, or 1.1% of the
company, criticized directors for failing to prepare a backup plan
to the Alibaba spinoff.
"Requiring shareholders to continue to wait for definitive
action for another year or more—and extending the tenure of senior
management—while the company evaluates this reverse-spin is simply
unacceptable," the investor wrote in its letter.
Instead of giving Ms. Mayer more time, Canyon Capital is pushing
for an immediate sale of all or parts of Yahoo's business. The firm
is particularly concerned that Yahoo didn't include "any clear
details in terms of analysis, process or timing" with its
announcement.
"The market already assigns significant negative value to the
company's mature core operating business and assets and, in our
view, this delay will inevitably cause further decline in value,"
Canyon said in its letter.
Canyon didn't specify whether it would plan to take any
action.
Canyon's call to sell the business echoes a recent push by
activist investor Starboard, which last month urged Yahoo to halt
its Alibaba spinoff and find a buyer for the Internet business.
Starboard hasn't yet issued a public response to Yahoo's new
proposal to spin off the core business and didn't immediately
respond to a request for comment.
The size of Starboard's stake in Yahoo isn't clear but it is
among the firm's largest positions, people familiar with the matter
have said.
Maynard Webb, Yahoo's chairman, told investors last week that
the board hasn't approved a sale process. But in a sign that many
observers took as a signal that Yahoo is open to a sale, Mr. Webb
said that "the board has a fiduciary duty to entertain any
offers."
Write to Douglas MacMillan at douglas.macmillan@wsj.com and
David Benoit at david.benoit@wsj.com
(END) Dow Jones Newswires
December 13, 2015 21:25 ET (02:25 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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