September 26, 2014 / 4:36 PM / 6 years ago

Activist investor takes stake in Yahoo, urges AOL combination

A Yahoo logo is pictured in front of a building in Rolle, 30 km (19 miles) east of Geneva, in this file picture taken December 12, 2012. REUTERS/Denis Balibouse

SAN FRANCISCO (Reuters) - Activist investor Starboard Value LP said on Friday it has acquired a significant stake in Yahoo Inc YHOO.O and urged the struggling Internet company to cut costs, monetize its Asian assets and seek a “strategic combination” with AOL Inc AOL.N.

Shares of Yahoo Inc were up 3.75 percent at $40.41 at midday.

In a letter to Yahoo Chief Executive Marissa Mayer, Starboard said it was looking forward to “engaging directly” with Yahoo to discuss how its plan could be implemented in a timely manner.

“We believe a merger of AOL and Yahoo’s core business may be one of the best ways to both fully seize the cost reduction opportunity and also to tax efficiently monetize Yahoo’s non-core equity holdings,” the letter said.

Reporting by Alexei Oreskovic; Editing by David Gregorio

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