Yahoo shares are down more than 3% this morning after the company said that it has bought back most of the shares owned by Third Point’s Daniel Loeb — leading him and colleagues Harry Wilson and Michael Wolf to resign from the board at the end of this month. “Since our Board’s rigorous search led us to hire Marissa Mayer as CEO, Yahoo!’s stock price has nearly doubled, delivering significant value for shareholders,” Loeb says. “I’m confident that with Marissa at the helm and her team’s focus on innovation and engaging users, Yahoo! has a bright future.” The agreement to buy 40M of Loeb’s shares, at $29.11 apiece, will bring his stake in the company below 2% — and will count toward the company’s plan to repurchase $1.9B of its stock. Loeb is an investor in Variety with Deadline’s parent company PMC.
The sale makes sense for Loeb, the billionaire founder of hedge fund Third Point. He’s a value investor who likes to engage in deep research and then bet on relatively boring companies and assets that others overlook. Few would consider Yahoo undervalued after its stock appreciated 77% in the last 12 months. And the company is far from overlooked with former Google exec Mayer at the helm. The sale gives Third Point cash to devote elsewhere — possibly including Sony where Loeb is urging the company to issue stock in its movie, TV and music assets. (He wants Sony to hang on to about 80% and let the public trade the remaining 20%.) Meanwhile, Third Point remains a major shareholder in Yahoo.
But Yahoo shareholders may fear that once Loeb and his colleagues leave the board, the company may use the proceeds from the interest it sold in Alibaba to buy assets — like it just did with its $1.1B deal for Tumblr — says Barclay’s Capital’s Anthony DiClemente.
Here’s the release: (more…)