Business

Yahoo may cede board seats to activist hedge fund

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Published Feb. 26, 2016, 10:05 p.m. ET

At Yahoo!, the bargaining for board seats is about to begin.

The embattled Web portal’s board of directors is close to deciding to offer at least two seats to activist hedge fund Starboard Value as it looks to avert a looming proxy battle, The Post has learned.

The offer, if made, could be seen as the board buckling after months of relentless attacks from New York-based Starboard, whose founder Jeff Smith is looking to oust Chief Executive Marissa Mayer as he agitates for a sale of the company’s core Internet business.

Insiders, however, are skeptical whether Starboard will accept anything less than majority control of Yahoo!’s board, which recently dwindled to seven seats with the departures of investing tycoon Charles Schwab and tech entrepreneur Max Levchin.

“Starboard will probably want at least four seats if it doesn’t try to replace the board entirely,” one source told The Post, noting that Starboard successfully took the latter route with Red Lobster owner Darden Restaurants in October 2014.

“Starboard feels like they’re coming from a position of strength,” another source added.

Mayer was in New York this week visiting Wall Street firms looking to gin up support for her turnaround efforts, The Post reported exclusively.

Mayer’s plan would include invigorating Yahoo!’s mobile platforms and slashing costs with more than 1,500 layoffs.

Starboard founder Jeff SmithBloomberg

But during the trip, sources said, the 40-year-old CEO also displayed a fresh willingness to comply with the wishes of Wall Street — namely, to sell the company’s core Internet business to the highest bidder.

Mayer now “realizes she faces a skeptical shareholder base and selling the company is the right thing to do,” said a source close to the situation.

Last week, Yahoo!’s board said it had hired Goldman Sachs, JPMorgan and PJT Partners to explore a possible sale. Meanwhile, however, insiders say Mayer has been getting her own strategic advice from tech banker Frank Quattrone.

“[Starboard] does not trust this board to be able to do the right thing,” a source close to the hedge fund told The Post. “There clearly have been conflicts between management and the board, and it’s unclear whether this board is strong enough.”