Starboard Asks Yahoo To Monetize Intellectual Property And Real Estate Assets

(RTTNews) - Starboard Value LP , a significant shareholder of Yahoo! Inc. (YHOO), announced that it sent a letter to Yahoo CEO Marissa Mayer and Yahoo's Board of Directors, stating that the tax-free spin-off of Yahoo's Alibaba stake is a good first step, but not enough to solve yahoo's current valuation discrepancy.

Starboard continues to believe that there are other opportunities within the company's control to create significant value for yahoo shareholders.

Starboard also believe certain changes can unlock $11.1 billion of shareholder value or $11.70 per Yahoo share. This would imply an increase of 27% from Yahoo's current stock price or equivalently, approximately a 100% increase in the value of the Yahoo Stub.

Starboard believe Yahoo can create additional value for shareholders through a licensing program for its broad intellectual property portfolio and a monetization of all or part of the Company's valuable real estate assets. Collectively, it believes these assets are conservatively worth $1.7 billion or $1.80 per Yahoo share in excess capital that the Company should return to shareholders.

Starboard said it recognizes and appreciate the remarks made during the fourth quarter conference call about the Company's desire to monetize the Yahoo! Japan stake in a tax-efficient manner. It believes a tax efficient separation of this asset can create $2.6 billion to $3.1 billion of value which is the same value that Yahoo could create by approximately doubling the $580 million Core Business' EBITDA.

In Starboard view, shareholders remain extremely concerned about the possible uses of Yahoo's current $5.4 billion in net cash. Although it recognizes and appreciate that the Company has repurchased $3 billion of stock since the Alibaba IPO, it believe sthere is no reason for Yahoo to continue to hold over $5 billion in net cash.

Therefore, Starboard believe that Yahoo should return an additional $3.5 billion to $4.0 billion of cash to shareholders through additional share repurchases.