By Alexei Oreskovic
SAN FRANCISCO, March 28 Daniel Loeb, chief
executive of hedge fund Third Point, said he would continue to
push to revamp Yahoo Inc's board of directors following
Yahoo's decision to reject him as a board member.
In a letter to Yahoo CEO Scott Thompson on Wednesday, Loeb
blasted Yahoo for excluding shareholders from its board and
accused the company of "making a mockery" of sound corporate
Third Point, Yahoo's largest institutional shareholder with
a 5.8 percent stake, has launched a proxy fight to appoint four
directors to the Internet company's board of directors.
Yahoo's market capitalization is less than half of the $44.6
billion Microsoft Corp offered for the company in 2008,
giving Third Point.
While some observers expected Yahoo and Third Point to reach
a compromise that would avoid a drawn-out proxy fight, so far
the two sides have failed to find common ground.
On Sunday, Yahoo announced the appointment of three new
directors hand-picked by the company.
Yahoo also said its board had offered to propose one of
Third Point's four nominees, Harry Wilson, and a second person
acceptable to both Yahoo and Third Point to join the board in
order to avoid a proxy fight.
But Yahoo said giving a board seat to Loeb would not be in
the best interest of the company.
In his letter, Loeb took issue with Yahoo's reason for
rejecting him. Loeb said he was told by Yahoo that the board
felt his experience and knowledge would not be "additive" to the
board and that as Yahoo's largest outside shareholder, he would
be "conflicted" as a director.
"It is absurd to assert a 'conflict' that would render a
board member unqualified based either on ownership or a sense of
urgency to repair a company that has been - by your own
admission - languishing for years," Loeb wrote.
Yahoo's revenue declined more than 20 percent last year, at
a time when the businesses of Web rivals Google Inc and
Facebook saw healthy growth.
Loeb argued that his interest in Yahoo was not solely
focused on short-term results.
He noted that Third Point had advocated that Yahoo hold on
to its 40 percent stake in Chinese Web giant Alibaba Group. He
said the stake had more value than was generally understood, and
Third Point had suggested that Yahoo retain the stake "unless it
can get fair value."
Last month, negotiations collapsed between Yahoo, Alibaba
and Japan's Softbank Corp involving a complex $17
billion tax-free asset swap. The deal would have seen Yahoo part
with a big chunk of its stake in Alibaba.
In an emailed statement Yahoo said it remains open to
hearing Third Point's ideas and working constructively with
Shares of Yahoo finished Wednesday's regular trading session
down 11 cents at $15.32.
Loeb said his firm remained willing to "engage further," but
"will not deviate from our demand for badly needed shareholder