Yahoo has all but done away with one of its most outspoken critics over the last few years.
The company on Monday announced that it will repurchase 40 million shares of its common stock held by hedge fund Third Point for $29.11 per share. The transaction, which comes out to nearly $1.2 billion in cash, will see Third Point left with about 20 million shares, giving the company less than 2 percent ownership in Yahoo.
Still, it's not a bad return for one year's work: Loeb and his company bought Yahoo shares at around $13, meaning he essentially doubled his cash in about a year.
If the Third Point name sounds familiar, it's because the company's CEO Daniel Loeb was a thorn in Yahoo's side last year. In 2012, Loeb, through his hedge fund, amassed tens of millions of Yahoo shares as he tried to more effectively influence the company's direction. A key component in that effort was to take aim at Yahoo's management.
Loeb, after several months of complaining about Yahoo's direction, wrote a letter to the company's board in May 2012, revealing that the company's former chief executive Scott Thompson did not have a computer science degree, as he contended, but actually held an accounting degree from Stonehill College. Before long, Thompson was out and Loeb had far more power at Yahoo.
Loeb used that power to nominate himself, along with other executives, to the company's board of directors. He was also instrumental in bringing on Yahoo's new CEO Marissa Mayer.
With the stock repurchase, however, Mayer is cleaning house. Loeb and two of his fellow appointees, Harry Wilson and Michael Wolf, will officially resign from Yahoo's board on July 31. Max Levchin, another Loeb favorite, will stay on as a board member, due mainly to the fact that he was endorsed by both Loeb and the board.
It's not clear why Loeb is leaving now. Considering the headaches he caused at Yahoo last year, it's possible the company has decided to use its cash to get him out of the way. On the other hand, Loeb might have watched Yahoo's shares soar since last year and decided to cash out for a huge profit.
Regardless, Loeb says Yahoo has a bright future ahead of it:
Harry, Michael and I are pleased to have played key roles in Yahoo's resurgence since we joined the Board last spring. 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.
Mayer was similarly gracious, thanking Loeb and his team for their service to Yahoo and acknowledging that they "helped position Yahoo for future success."