Yahoo has officially put up the “for sale” sign for its core business.
According to Reuters, the sale was launched today but would not detract activist hedge fund Starboard Value, which has a 0.75% stake in Yahoo, from seeking a proxy fight with the company.
The Internet company has struggled with slowing revenue in recent years and pressure has been mounting from shareholders for the company to sell its core business whilst maintaining its Asian assets.
Reuters reports the founder of Starboard, Jeffrey Smith, will continue with his plans to nominate an entirely new group of directors to the board of Yahoo.
The hedge fund sent a letter to the digital business earlier this year criticising Yahoo’s management saying the “team that was hired to turn around the Core Business has failed to produce acceptable results, in turn, causing massive declines in profitability and cash flow.”
The letter said “investors have lost all confidence in management” and called for “significant changes across all aspects of the business starting at the board level, and including executive leadership.”
Earlier this month, chairman Maynard Webb wrote that the Board believed “exploring additional strategic alternatives” would be in the “best interest for its shareholders” — a phrase that was seen by many that Yahoo would be going up for sale.
Wall Street valued Yahoo’s core business — excluding its Alibaba stake — at less than zero last year despite the company generating $4.5 billion in revenue.
The core business is comprised of cash and short-term investments as well as its search business, websites including Yahoo Finance and Yahoo Mail, Tumblr and mobile analytics company Flurry.
The company has tried to drive its mobile business since Mayer took over in 2012 with plans to capture a bigger share of the smartphone audience and increase advertising revenue.
Despite mobile revenue increasing by 15% to $291 million in the company’s fourth-quarter earnings, it still fell short of competitors such as Facebook, which saw an 81% jump in mobile ad revenue to $4.5 billion.
Yahoo raised the possibility of spinning off its Alibaba stake last year to “Aabaco Holdings”, but suspended the plan saying the Board would “evaluate alternative transaction structures to separate the Alibaba stake”.
Investors will be able to nominate directors from February 25 to March 26.