Yahoo! Is in Play Thanks to Activist Starboard Buying Big Stake

NEW YORK (TheStreet) -- Yahoo!  (YHOO) President and Chief Executive Marissa Mayer needs a counter-offer to the one proposed by activist investor Starboard Value Friday that it has purchased a large stake in the Internet company and wants Yahoo! to merge with AOL (AOL) .

That idea has a lot of merit because there could be huge layoffs in the combined company, assets could be rationalized and earnings before interest, taxes, depreciation and amortization could be much higher. But I don't think it will necessarily happen.

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If I was Mayer, I would know that the clock is ticking. Starboard will likely seek board representation on Yahoo!'s board in four months. 

And Starboard will have a good chance of getting a short slate of directors elected based on the disappointing results of the core business since Mayer took over. She doesn't want a bunch of activists on her board, but how does she fight that?

Mayer should call Alibaba Group (BABA)  Founder and Executive Chairman Jack Ma and SoftBank (TYO)  Chairman and Chief Executive Masayoshi Son right away and figure out a deal where they can all win. That could involve them buying Yahoo! or just buying back their stakes from Yahoo!.

Whatever the solution, it will have to be good for Alibaba, SoftBank and Yahoo! shareholders. Mayer must show shareholders that she can create more value for them than Starboard can.

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Because Yahoo! is in play, its shares will likely continue to rise next week.

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