Yahoo forms panel to explore strategic options

By Anya George Tharakan and Abhirup Roy

REUTERS - Yahoo Inc said its board has formed a committee of independent directors to explore strategic alternatives, the struggling Internet company's latest step to buy time from increasingly impatient investors.

Yahoo, which is exploring strategic alternatives alongside its plan to revamp and spin off its Internet business, also said the committee and its advisers are working on a process for reaching out to and engaging with potentially interested strategic and financial parties.

The company's advisers started working on the sale process on Friday, people familiar with the matter told Reuters.

Earlier this month, Yahoo engaged with interested parties individually, without running a formal auction process, according to people familiar with the matter.

This is a strong indication that CEO Marissa Mayer and the board may be willing to sell the Internet business, while trying to sidestep a possible proxy fight from activist investor Starboard Value LP.

Bloomberg reported on Wednesday that Starboard, which owns about 0.75 percent of the company, was taking initial steps toward a potential proxy fight with Yahoo.

Starboard has been pushing for changes at the company since 2014, asking it to separate its Asian assets and sell the core business.

"It seems pretty clear that the only reason this is happening even is because of the threat of the proxy fight," Pivotal Research analyst Brian Wieser said.

Shares of Yahoo were up 1.9 percent at $29.99 in morning trading.

Yahoo announced this month it was considering strategic alternatives for its core Internet business, after shelving previous plans to spin off its stake in ecommerce giant Alibaba Group Holding Ltd.

"Separating our Alibaba stake from Yahoo's operating business is essential to maximizing value for our shareholders," Mayer said on Friday.

Starboard was not immediately available for comment.

"I think a proxy fight would be the right thing to do," said investor SpringOwl Asset Management's Managing Director Eric Jackson.

Yahoo's board is concerned about the risk of losing a possible proxy contest, he said.

Verizon Communications Inc is among the companies seen as a potential buyer of Yahoo's core business, but its chief financial officer said in December such a sale could make sense though it was premature to discuss.

The committee has engaged Goldman Sachs & Co Inc, J.P. Morgan and PJT Partners Inc as financial advisers, and Cravath, Swaine & Moore LLP as legal adviser.

(Reporting by Anya George Tharakan and Abhirup Roy in Bengaluru and Greg Roumeliotis in New York; Editing by Sriraj Kalluvila and Shounak Dasgupta)