Starboard Value Building Pressure On Yahoo! Inc. (YHOO) For Merger With AOL Inc. (AOL)

Starboard Value with its 1% stake in Yahoo! Inc. (NASDAQ:YHOO) is mounting pressure on CEO, Marissa Mayer, to initiate plans of merging with AOL, Inc. (NYSE:AOL) as well as return value to shareholders on recently offloaded stakes in Alibaba Group Holding Ltd (NYSE:BABA). Bloomberg’s, Paul Sweeney, believes merging with AOL will be a perfect fit for Yahoo, which has been lagging behind in mobile videos business; a space where the latter is dominant player.

“I think AOL, Inc. (NYSE:AOL) programmatic platform that they have been investing in most notably with adapt TV would melt with anybody who wants to be a player in online video particularly mobile online video. Yahoo is clearly a major player on the online player but what they have not done is clearly developed a good mobile business as of yet,” said Mr. Sweeney.

Sweeney also pointed out that a number of investors remained skeptical about the viability of a Yahoo-AOL, Inc. (NYSE:AOL) deal going through especially on whether it will result in any cost saving synergies or generate long-term value. Market Co-host, Erik Schatzker, maintains Starboard is justified to demand anything of Yahoo! Inc. (NASDAQ:YHOO) despite owning a mere 1% in the giant search company.

Schatzker believes that the fact that a number of Yahoo investors are in unison with its suggestions on the way forward for the company gives it the power to demand anything. Starboard Value has been pushing Yahoo! Inc. (NASDAQ:YHOO) to return value to shareholders after successfully offloading stakes of Alibaba Group Holding Ltd (NYSE:BABA) last year. Mayer is poised to face increased pressure and criticism in the coming months especially after reports emerged she was planning to use part of the funds to carry out a major acquisition.

“They are worried that instead of doing a tax efficient spin-off she is going to do a split off which will mean that somehow she exchanges the value of Alibaba Group Holding Ltd (NYSE:BABA) and Yahoo! Inc. (NASDAQ:YHOO)’s Japan stake for some kind of considerations whether it will be cash or stock,” said Mr. Schatzker.

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