SUNNYVALE (dpa-AFX) - Yahoo! Inc (YHOO) Friday acknowledged receipt of a letter from Starboard Value LP, which has urged the Internet company to seek a possible combination with AOL Inc (AOL) and monetize its non-core equity investments.
In a statement, Yahoo CEO Marissa Mayer said, 'We are committed, as an organization, to acting in the best interests of the company and all of its shareholders.'
'As part of our regular evaluation of Yahoo's strategic initiatives to drive sustainable shareholder value, we will review Starboard's letter carefully and look forward to discussing it with them.'
Mayer also said that the company is committed to building value for all shareholders through the continued execution of its strategy, investing in products that will drive sustainable growth.
Earlier in the day, Starboard, in a communique to Yahoo, said it has acquired a significant ownership stake in Yahoo, and urged the company to seek a possible combination with AOL Inc (AOL) as well as opportunities to monetize its non-core equity investments and cut costs.
Starboard believes a combination between Yahoo's Core Search and Display businesses and AOL could result in up to $1 billion of synergies while also potentially facilitating the realization of value from Yahoo's non-core equity stakes.
Also Starboard highlighted opportunities for significant shareholder value creation at Yahoo, including the monetization of the company's non-core minority equity investments in Alibaba Group Holding Ltd (BABA) and Yahoo Japan in a structure that delivers value directly to Yahoo shareholders in a tax-efficient manner.
Starboard also stressed on the opportunity for cost reductions at Yahoo, specifically with a goal of reducing losses in the Display business by between $250 million and $500 million.
Starboard also said it wants Yahoo to halt its acquisition strategy which has resulted in $1.3 billion of capital spent since Q2 2012 while consolidated revenues have remained stagnant and EBITDA has materially decreased.
Yahoo's main assets include its core Search and Display advertising businesses, its non-core 15% stake in Alibaba, and its non-core 35.5% stake in Yahoo Japan.
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