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Dan Loeb and Yahoo: Recent Developments

Dan Loeb filed an amended 13D form with the SEC this morning disclosing the recent development.  You can read Dan Loeb’s Yahoo letter (September 8th) here. Here is what Dan Loeb said in the filing (we slightly modified Dan Loeb’s filing to make it more readable):


On September 8, 2011, the Dan Loeb sent to Yahoo a letter expressing the view that the Issuer is grossly undervalued and calling for the Board of Directors to recognize its misjudgments and failures (the “September 8 Letter”). The September 8 Letter called for certain directors to voluntarily resign their Board of Directors seats and stated that Third Point had held discussions with respected entrepreneurial executives who could be potential director candidates who would add value to a reconstituted Board of Directors. The September 8 Letter concluded by noting that the decision to undertake turnover of the Board of Directors initially rests with the individual directors and expressed the hope that the Issuer’s directors would take Dan Loeb’s views seriously and that a proxy contest would not be necessary in order to effectuate a change to the Board of Directors.

Following receipt by Yahoo of the September 8 Letter, Yahoo sought to arrange a conversation between Mr. Loeb and either Roy Bostock, the Chairman of the Board of Directors, or Jerry Yang, a founder and director of Yahoo. A telephone conversation was subsequently arranged for September 12, 2011 (the “September 12 Conversation”), between Mr. Loeb and Messrs. Bostock and Yang, in which others from Third Point and Yahoo participated. The Issuer confirmed, prior to the September 12 Conversation, that it would not provide any material non-public information about Yahoo to Third Point.[IM: Dan Loeb is protecting himseld against potential insider trading charges here. We believe whatever is disclosed in that meeting is really material information. We are glad Dan Loeb is sharing the details.]

At the outset of the September 12 Conversation, Messrs. Bostock and Yang discussed with Mr. Loeb recent general developments in Yahoo’s business. After Dan Loeb questioned Mr. Bostock’s leadership and commitment to act in the best interests of shareholders, Dan Loeb concluded from Mr. Bostock’s failure to acknowledge any responsibility for the Yahoo’s problems that Mr. Bostock was unaware of what it takes to be an effective leader and that Mr. Bostock was not likely to resign from the Board of Directors. Dan Loeb informed Messrs. Bostock and Yang that Mr. Bostock was part of Yahoo’s problem and that the Management Company intended to pursue whatever efforts were necessary to remove Mr. Bostock from the Board of Directors. The September 12 Conversation ended abruptly when Mr. Bostock terminated the call.

In light of the September 12 Conversation, Third Point has concluded that the it would be unable to purchase additional shares of the Common Stock until such time as the Funds complied with the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”). The Management Company is therefore preparing HSR Act filings for the Funds and will be filing them promptly so that they may continue to purchase shares of Common Stock should the Dan Loeb determine that such purchases would be in the interest of the Funds.

On September 14, 2011, Dan Loeb sent a letter to Mr. Yang in which Dan Loeb expressed his disappointment at Mr. Bostock’s failure in the September 12 Conversation to acknowledge his role in the decline in the Issuer’s fortunes and accept any responsibility for the Yahoo’s problems.

Insider Monkey will post Dan Loeb’s letter to Jerry Yang shortly. The critical question is whether Jerry Yang is supporting Dan Loeb or not.

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