Yahoo! (YHOO), AOL (AOL) Merger Would Require Proxy Fight, Says Analyst

Pivotal Research maintained a Hold rating on Yahoo! (NASDAQ: YHOO) with a price target of $41. Comments follow news Starboard Value LP acquired a stake in Yahoo! and delivered a letter to CEO Marissa Mayer suggesting a merger with AOL (NYSE: AOL). In the view of analyst Brian Wieser, a proxy fight may be necessary to get a deal done.

"Overall, we agree with Starboard’s premise that significant value could be created if Yahoo followed through with Starboard’s proposals, although the bulk of the value to be created requires confidence that it is possible to divest Yahoo’s stakes in Alibaba and Yahoo Japan tax efficiently. The other proposals – cost cuts, an elimination of M&A and a sale to AOL – would also create value, although we suspect a proxy fight may be necessary for them to play out, if Yahoo does not develop an alternative plan of their own," said Wieser.

For an analyst ratings summary and ratings history on Yahoo! click here. For more ratings news on Yahoo! click here.

Shares of Yahoo! closed at $40.66 yesterday.

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