SUNNYVALE -- Activist investor Daniel Loeb is selling part of his stake in Yahoo (YHOO) and departing the company's board of directors, taking a hefty profit just 14 months after he succeeded in ousting the company's previous CEO and setting it on a path to major stock gains.
Loeb and two other directors representing his Third Point Investors hedge fund will step down from the board at the end of this month, Yahoo announced Monday.
While Loeb will retain a smaller investment in the company, he's taking a sizable profit of close to $600 million. The New York-based
financier acquired nearly 6 percent of Yahoo's outstanding shares back in 2011, when the stock was trading in a range between $13 and $16 a share. Yahoo said it will buy back 40 million shares from Loeb, or about two-thirds of his stake in the company, at Friday's closing price of $29.11.
The news marks the end of one chapter in Yahoo's history, as Loeb collects his profit and steps back from an activist role, leaving new CEO Marissa Mayer without the looming presence of a major shareholder peering over her shoulder as she attempts to engineer a turnaround. The parting appeared amicable -- Loeb and Mayer issued statements praising each other Monday.
Yahoo's stock
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has surged more than 70 percent over the past year, in part because of the soaring value of its holdings in two Asian Internet companies. Analysts also credit a company overhaul that Mayer launched after the ouster of former CEO Scott Thompson and the resignations of several longtime directors, including the company's cofounder, Jerry Yang.
Loeb had agitated for those changes by publicly criticizing Yang and other board members for inept leadership and for mishandling several deals. Loeb threatened to run his own slate for the board and also mounted a public challenge to Thompson, who resigned in May 2012 after Loeb called attention to a falsely claimed computer science degree on Thompson's résumé.
Mayer was hired two months later by a mostly new board of Yahoo directors that included Loeb, turnaround expert Harry Wilson and former MTV President Michael Wolf. Wilson and Wolf are now resigning, along with Loeb.
In a statement, Mayer thanked all three for being "incredibly supportive" and added: "Daniel Loeb had the vision to see Yahoo for its immense potential -- the potential to return to its greatness as a company and the potential to deliver significant shareholder value."
Loeb responded with a
The headquarters of Yahoo Inc. is pictured in Sunnyvale, California, May 5, 2008.REUTERS/Robert Galbraith ( © Robert Galbraith / Reuters )
statement endorsing the CEO he helped hire: "I'm confident that with Marissa at the helm and her team's focus on innovation and engaging users, Yahoo has a bright future."
Yahoo will pay about $1.16 billion in cash for Loeb's shares, which the company said will be part of a $1.9 billion stock buyback program announced earlier this year. Loeb's company will still hold 20 million shares, or just under 2 percent of the company's stock. Those holdings have appreciated by at least $300 million or so, giving Loeb a total gain of nearly $1 billion on the investment.
Analysts credit Mayer with improving morale and revamping Yahoo's online products. But they gave lukewarm reviews after she reported last week that Yahoo's advertising business is still in decline.
"We see the performance of the core business as weak," Bernstein Research analyst Carlos Kirjner wrote in a note. He and others attribute Yahoo's stock surge to investor excitement about the upcoming initial public offering of Chinese e-commerce firm Alibaba, in which Yahoo owns a 24 percent stake.
Contact Brandon Bailey at 408-920-5022; follow him at Twitter.com/brandonbailey.