Proxy Ho? Like Yahoo, AOL Could Face Alternate Board Slate From Irked Investor as Early as Today.
Have you never heard of Starboard Value?
But the New York activist fund is readying to make a splash as soon as today, several sources said, if it follows through on the expected naming of an alternate board to challenge AOL.
Saturday is the official deadline to nominate directors to the board of AOL, also based in New York, which will have all eight up for reelection.
Sources said Starboard has talked to several Internet types, but that it has plans to put up a slate made up more of Wall Streeters to present at the company’s annual meeting later in the year.
In a filing last week, Starboard said it had been in discussions with AOL management about its concerns, so it is certainly possible the investor and the company could come to some agreement over board seats and strategic direction before it gets Yahoo-ugly.
That would make it a kind of an East Coast proxy battle version of what’s been going on over at Yahoo and its tussle with Third Point’s Daniel Loeb. He recently followed through on long-expressed unhappiness with the Silicon Valley Internet giant, and named a slate of directors — including well-known media exec Jeff Zucker — to replace current ones there.
The same kind of thing has been in the works at Starboard, which sent a letter in late December to AOL CEO Tim Armstrong, saying his much-touted strategy around content was not a good one for investors.
Like Loeb at Yahoo, Starboard is one of AOL’s largest shareholders, with a stake of just over five percent.
The letter signaled an increasing impatience with the pace of Armstrong’s turnaround efforts, which are still in turnaround. Meanwhile, AOL’s stock has rebounded from last summer’s lows of near $10 a share.
The stock is up more than 22 percent this year, to $18.44. But that’s still down almost 20 percent from when AOL spun off from Time Warner and went public in late 2009.
The grumpy (and opportunistic) Starboard entered the picture late last year.
According to The Wall Street Journal:
“Starboard, which focuses mainly on small-cap companies, was spun off from Cowen Group Inc.’s Ramius Capital LLC in March. In October, the fund successfully waged a proxy fight against hair-salon chain owner Regis Corp. when three of its director nominees were elected to Regis’s board. AOL, which was spun off from Time Warner Inc. in 2009 after a failed merger, is its most high-profile target yet.”
One of the investment fund’s bugaboos is Patch, the local news network that AOL has sunk a lot of dough into. Also under fire is Armstrong’s content efforts and the pace of its display advertising sales, including the high-profile acquisition of the Huffington Post and TechCrunch.
I have emails into all the bigs at AOL and Starboard, so we’ll see who calls back first, if at all.