Nov. 4 (Bloomberg) -- Yahoo! Inc. investor Third Point LLC increased pressure on the company by demanding two board seats and asking co-founder Jerry Yang to step down as a director.
Third Point objected to reports that Yahoo is considering a transaction with private equity firms that would effectively establish a “controlling position” when combined with the stakes of Yang and co-founder David Filo, Third Point Chief Executive Officer Daniel Loeb said in a letter to the board. The New York-based investment firm also faulted Yang for the role the reports say he is playing in negotiations.
“We are deeply concerned by news reports that you are considering a leveraged recapitalization that will allow private equity firms to gain substantial equity positions,” Loeb said. “We will not tolerate any transaction which appropriates for insiders opportunities that duly belong to current Yahoo shareholders.”
Yahoo responded to the letter by saying the “board’s comprehensive strategic review is being properly managed for the benefit of all shareholders,” according to an e-mailed statement. “Mr. Yang is one of 9 directors with the exact same fiduciary duties and motivation as all of his fellow directors - - to serve the best interests of all the company’s shareholders.”
Third Point already had called for Chairman Roy Bostock to step down after he fired Yahoo CEO Carol Bartz in September. Yahoo, which had failed to keep pace with rivals Google Inc. and Facebook Inc., has said it is reviewing its strategic options and seeking a new CEO.
’Look at All Options’
Yang said last month that Yahoo isn’t necessarily up for sale.
“The intent going in is not to put ourselves up for sale,” Yang said at the All Things Digital Asia conference in Hong Kong. “The intent is to look at all options. There’s plenty of options for the board, and plenty of options for our shareholders to realize value.”
The comments came after Jack Ma, chief executive officer of Alibaba Group Holding Ltd., China’s biggest e-commerce company, said he is “interested” in buying Yahoo and is awaiting a decision.
Loeb wants access to the board seats soon, he said.
“Given the board’s inability -- or perhaps unwillingness - - to properly solicit true strategic alternative bids, let alone to negotiate them, Third Point demands that we be awarded two board seats -- those created by the vacancies of Chairman Bostock and Mr. Yang, or two newly-created ones,” he said. “We are prepared to assume these positions immediately.”
Yahoo shares pared losses after the statement was released. The Sunnyvale, California-based company slipped 1.6 percent to $15.24 at 4 p.m. New York time. It had earlier fallen to $14.95.
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