In September 2014, Starboard has been encouraging Yahoo to consider having a merger with AOL for the reasons that it could create $1 billion in collaborations by decreasing redundant online advertisements and display ads and overhead costs as well.
Starboard Value LP, an activist investor has been vocal and obvious of its stand that Yahoo and AOL should consider a merger to be able to cut on costs and lift their profits. AS rumors buzz around that Yahoo has been exploring large scale acquisitions.
Starboard holds stake on both firms. It acquired a significant ownership venture since September the previous year. It is concerned and worried that Yahoo! may consider acquiring a big news network like CNN, or a media property like Scripps Network Interactive.
A 1.9 million stake on AOL and 7.7 million stake on Yahoo! which was disclosed by Starboard itself.
A letter was sent to Yahoo! CEO Marissa Meyer, stating its concern about the re-surfacing rumors that Yahoo! has been planning to acquire big firms when it should set its goal first on monetizing its investments on Yahoo! Japan Corp., and Alibaba Group Holding Ltd (BABA).
Yahoo! has $8 billion stake on Yahoo! Japan as of Sept. 30, 2014 and a 15% on Alibaba which is around $39.17 billion as trade closes on Wednesday.
Moreover, cash rich split off issues as quite alarming to the activist investor at this moment, Starboard clearly expressed its concern in its letter to Meyer. Starboard co-founder and Chief Executive Officer Jeffrey Smith disclosed the letter.
Yahoo!'s shares went up a notch at 2.4% at $49.75, while for AOL it went up at 4.6% at $48.27 as trading closes on Thursday afternoon.