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 the hedge fund 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, led by activist investor Daniel Loeb, will own less than 2% of the internet company, and the three people it appointed to the board last year — 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. Levchin first joined the board in December 2012.
The move marks a sea change for Yahoo, with Loeb — an activist shareholder pushing through some significant changes at the very top of Yahoo at a time when the company was falling rapidly against competition from Google in search, ads and more — now taking a step back. Changes instigated by Loeb have included pushing out Scott Thompson and putting in Ross Levinsohn as the interim CEO before Marissa Mayer appointed as the permanent CEO.
“Harry, Michael and I are pleased to have played key roles in Yahoo’s resurgence since we joined the Board last spring,” said Loeb in a statement. “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.”
For its part, Yahoo has released a courteous farewell statement, all the while acknowledging that there is still a lot of work to do — not least by integrating and making some sense of the 19 acquisitions Yahoo has made to date under its current CEO. (The latest, of social networking data startup Ztelic in China, was announced three days ago.)
“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.