Starboard Value LP’s Success with Olive Garden Might not be Enough to Handle Yahoo’s Troubles
Activism is on the rise in American corporations and in recent years shareholders have been taking stakes and agitating for change to perk up returns.
Starboard Value LP, the investment firm set an example looking for a replacement of the entire board of Darden Restaurants Inc. They argued that services provided by the company's Olive Garden chain staff was not up to the mark and a reason behind losing customers.
More than a year back, in a rare shareholder coup, Starboard nominees managed to take control of the Darden board and demanded changes. That included streamlining the operations in the kitchen, serving breadsticks that tasted better and selling more alcohol. It worked, bringing the struggling company higher prices for its stocks.
Since that time the earlier struggling stock climbed 47 percent against the six percent for the S&P 500. The sales in year on year basis at existing Olive Garden locations increased for six consecutive quarters. It seems Starboard's next target is Yahoo which is considering various turnaround options including a sale. But for Starboard, it could be a tougher challenge. The New York based investment firm is looking for a complete change of Yahoos' board which is company that has more complicated problems and a market capitalization of $35 billion.
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