Business

Battle for Yahoo’s board next as investors look to rein in Mayer

Yahoo investors are running out of patience with CEO Marissa Mayer’s latest spin.

Shareholders are pressuring management to sell the core Internet business instead of attempting to spin it off into a separately traded company — a process that could take as long as a year.

“The better alternative from both a value and timing standpoint is for Yahoo to just sell the core business right now,” one shareholder told The Post.

This person believes a sale of the struggling business, including display advertising and search, will lead to a higher valuation as opposed to waiting for the market to value the new publicly traded entity and risk further decline. Analysts say the core business could fetch between $6 billion and $8 billion.

Activist hedge fund Starboard Value — which has been pushing for drastic changes — has already informed Yahoo of its intent to wage a proxy battle and nominate its own slate to replace the board, sources said.

Starboard couldn’t be reached for comment. Yahoo declined comment.

Mayer and Co. have been testing investors’ patience for months. In December, Yahoo abandoned its original plan to spin off its stake in Chinese e-commerce giant Alibaba, worth more than $30 billion, and said instead it would pursue splitting off the core business.

The new move, dubbed a reverse spin, came after growing concerns that Yahoo risked getting hit with a huge tax bill over its initial proposal.

Clearly, investors have their doubts about this new plan as well, which is supposed to achieve the same result — separating the core business from the Alibaba stake — but with a lower tax bill. Yahoo’s shares are down 4.5 percent since announcing the reverse spin.

One investor is fed up after the company insisted tax regulators would bless the Alibaba spin-off despite red flags.

Yahoo said in September it would forge ahead even though the Internal Revenue Service denied its request for a favorable tax-free ruling.

“The better alternative from both a value and timing standpoint is for Yahoo to just sell the core business right now,” one shareholder told The Post.

“It is the height of irresponsibility for Yahoo to not have developed and begun working on a back-up plan by September,” the investor said.

Even before that, the company and its tax advisers at giant law firm Skadden, Arps should have seen the warning flares sent up as early as last January, when IRS leadership signaled discomfort with a range of corporate spin-offs.

“Shareholders are rightly incensed with Yahoo’s lack of responsible planning,” the investor added.

As a consequence, shareholders are losing faith in both Mayer and in Chief Financial Officer Ken Goldman, and their ability to turn around the company.

The Internet company recently put a real-estate holding in Santa Clara, Calif., on the market to raise cash. That is likely part of a wider cost-cutting plan that the company is expected to articulate in the coming weeks, possibly ahead of its earnings report later this month.

But for some Yahoo shareholders the cost-cutting is too little too late. They have given up on a turnaround and want the business to be sold.