* Starboard files for nomination of three candidates
* Wants AOL to give all of patent proceeds to shareholders
* Concerned about Patch and display ad business
April 10 (Reuters) – Activist hedge fund Starboard Value,
dissatisfied with AOL’s $1 billion deal to sell the majority of
patents to Microsoft Corp, has filed with U.S.
regulators for the nomination of three of its candidates to the
board of the Internet firm.
In a letter to the AOL Inc board released on
Tuesday, Starboard said that while it was pleased with the
patent sale, it did not address “serious concerns” with the
“poor operating performance” at AOL.
Starboard Value said in February it intended to nominate
five members to AOL’s board. Its potential nominees were Ronald
Epstein, CEO of Epicenter IP Group; Steven Fink, former CEO of
Larry Ellison’s investments; Dennis Miller, a strategic adviser
to Lionsgate; Jeffrey Smith, CEO of Starboard Value; and James
Warner, principal of Third Floor Enterprises, an advisory firm
specializing in digital marketing and media.
Starboard, which with a 5.3 percent stake in the Internet
company is one of its largest shareholders, has been agitating
for a shakeup. One of the paths it wanted AOL to pursue was an
auction of its patents.
On Monday, AOL said it was selling the majority of its
patents to Microsoft for $1 billion and that it would return a
“significant portion” to shareholders.
Starboard said AOL should return all the proceeds to its
shareholders.
A representative from AOL was not immediately available to
comment.
“We remain concerned that shareholder capital will continue
to be used for poorly conceived acquisitions and investments
into money-losing initiatives,” according to the letter.
Starboard singled out Patch, a group of community news
websites, and AOL’s splashy display ad business.
The investment fund said that it was planning to “promptly”
file preliminary proxy materials for its board slate.
Shares of AOL, which jumped more than 40 percent on Monday
after the patent sale announcement, closed down 6 percent at
$24.82 on Tuesday on the New York Stock Exchange.
