Looks like Yahoo is trying to take control of its own destiny once again. The company today announced that it would repurchase 40 million shares owned by Third Point LLC at a price of $29.11 per share, working out to some $1.164 billion in value. As a result, Third Point will own less than 2% of the internet company, and the three people it appointed to the board last year — Daniel S. Loeb, Harry J. Wilson, and Michael J. Wolf — will resign, effective July 31.
Entrepreneur Max Levchin, a joint appointment between Third Point and the Yahoo board, is staying on, and “the remaining directors are committed to revisiting the Board's size and composition,” the company says. He first joined the board in December 2012.
The move makes a sea change for Yahoo, with Daniel Loeb — an activist shareholder pushing through some significant changes at the very top of Yahoo — now taking a step back. Those changes have included pushing out Scott Thompson and putting in Ross Levinsohn as the interim CEO before Marissa Mayer appointed as the permanent CEO.
“Daniel Loeb had the vision to see Yahoo for its immense potential – the potential to return to greatness as a company and the potential to deliver significant shareholder value,” said Mayer in a statement. “On behalf of the Board and our entire team, I'd like to take this opportunity to personally thank Dan, Michael, and Harry for the tremendous opportunities they created here at Yahoo!. They have been incredibly supportive as we have built our executive staff and developed our strategy, and they have helped position Yahoo! for future success. While there’s still a lot of work ahead, they've given us a great foundation.”
Yahoo says it expects to fund the transaction “primarily with cash, and the transaction is accretive to earnings per share (EPS).” Third point now owns around 20 million shares in the company’s common stock, Yahoo adds.
This share repurchase is part of a bigger $5 billion buyback program at the company.
Last week, the company said it repurchased $653 million in shares during Q2. Yahoo says it previously announced a plan to purchase an additional $1.9 billion of Yahoo! common stock: “The new repurchase agreement becomes part of that plan,” it notes. This means that there is an additional $700 million left in share buybacks remaining to be executed. We have reached out to the company to ask whether that will be in this quarter or later.
More to come. Release below.
SUNNYVALE, Calif.–(BUSINESS WIRE)–Yahoo! Inc. (NASDAQ: YHOO) today announced that it has entered into an agreement to repurchase 40 million shares of Yahoo! common stock beneficially owned by Third Point LLC (“Third Point”), at a purchase price of $29.11 per share. The purchase price equals the closing price of Yahoo! common stock on July 19, 2013.
Following the repurchase, Third Point will beneficially own approximately 20 million shares, representing less than 2 percent of Yahoo!’s outstanding common stock. In accordance with the Board's settlement agreement announced on May 13, 2012, each of the directors originally nominated by Third Point — Daniel S. Loeb, Harry J. Wilson, and Michael J. Wolf — have submitted their resignations from Yahoo!’s board of directors, effective July 31, 2013. The Board will then comprise seven members. Max Levchin, who was appointed as a director upon mutual agreement between Third Point and the Board, will remain on the Board. The remaining directors are committed to revisiting the Board's size and composition.
"Daniel Loeb had the vision to see Yahoo for its immense potential – the potential to return to greatness as a company and the potential to deliver significant shareholder value," said Yahoo! CEO Marissa Mayer. "On behalf of the Board and our entire team, I'd like to take this opportunity to personally thank Dan, Michael, and Harry for the tremendous opportunities they created here at Yahoo!. They have been incredibly supportive as we have built our executive staff and developed our strategy, and they have helped position Yahoo! for future success. While there’s still a lot of work ahead, they've given us a great foundation."
“Harry, Michael and I are pleased to have played key roles in Yahoo’s resurgence since we joined the Board last spring,” said Third Point CEO Daniel S. Loeb. “Since our Board’s rigorous search led us to hire Marissa Mayer as CEO, Yahoo!’s stock price has nearly doubled, delivering significant value for shareholders. I’m confident that with Marissa at the helm and her team’s focus on innovation and engaging users, Yahoo! has a bright future.”
Yahoo! previously announced a plan to purchase an additional $1.9 billion of Yahoo! common stock; the new repurchase agreement becomes part of that plan. Upon completion of this repurchase, approximately $700 million will remain under the $5 billion buyback authorization announced last year, on which the Company plans to continue to execute. Yahoo! expects to fund the transaction primarily with cash, and the transaction is accretive to earnings per share (EPS).
About Yahoo!
Yahoo! is focused on making the world’s daily habits inspiring and entertaining. By creating highly personalized experiences for our users, we keep people connected to what matters most to them, across devices and around the world. In turn, we create value for advertisers by connecting them with the audiences that build their businesses. Yahoo! is headquartered in Sunnyvale, Calif., and has offices located throughout the Americas, Asia Pacific (APAC) and the Europe, Middle East and Africa (EMEA) regions. For more information, visit the pressroom (pressroom.yahoo.net) or the company’s blog (yahoo.tumblr.com).
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