Yahoo! Inc. (YHOO) Shielding Itself from Activist Investors With Lock-Up Agreement

Yahoo! Inc. (NASDAQ:YHOO) has moved to protect it’s remaining interests in Alibaba Group Holding Ltd (NYSE:BABA) after agreeing to a one-year lock-up before offloading any stakes in the giant Chinese company. Bloomberg’s Rosalind Chin believes the move goes a long way in shielding the ailing search engine company from any activist pressure over the course of next year.

The Lock-up agreement is seen in many quarters as one of the ways that Yahoo! Inc. (NASDAQ:YHOO) is trying to ensure that the remaining 15% stakes in Alibaba attain maximum value uninterrupted. Yahoo sold about 140 million shares during the recently held Alibaba IPO.

The filing to the SEC also indicated that yahoo had agreed to vote for the director nominees of Softbank and Alibaba management.

 “[..]Essentially, it is making it a lot difficult to offload Alibaba stock and also this inclusion of the proxy vote is crucial as well. Making it far more difficult for perhaps any outsiders any activist investors to offload this valuable part of Yahoo, “said Mrs. Chin.

It is also being reported that Yahoo! Inc. (NASDAQ:YHOO) has entered into an agreement with Alibaba Group Holding Ltd (NYSE:BABA) giving the founders of the giant Chinese company the rights to vote for any future stake sales. Yahoo’s move to safeguard interests in Alibaba does not come as a surprise considering its other businesses in Asia led by Yahoo Japan, and Alibaba are more valuable than it’s core business

A pivotal research carried out values Yahoo core business at $15 a share while Asian assets both in Yahoo Japan and Alibaba carry the remaining $26 a share translating to the current trading margins of $41 a share.

“Alibaba Group Holding Ltd (NYSE:BABA) stake is very-very important for Yahoo! Inc. (NASDAQ:YHOO). Risk for the future obviously is if Alibaba does not do as well as has been focused, if it does badly then that of course is a risk to Yahoo as well,” said Mrs. Chin.

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