Key Points
- Activist investor TCS Capital Management has asked Yelp's board to raise the stock price.
- TCS Chairman Eric Semler has called Yelp to explore strategic options, possibly a sale.
- Semler also suggested a merger with Angi would benefit Yelp.
Yelp (YELP) shares jumped more than 5% on Monday after investor Activist TCS Capital Management blasted the business valuation website firm and called on the board to take action, possibly including a sale.
In a letter to President Diane Irvine and the Board of Directors, TCS Chairman Eric Semler said the company wanted to “express our serious concern and disappointment at the abysmal performance of the stock price. Yelp action and demand that the board immediately explore strategic alternatives.”
Semler added that TCS believes Yelp is “shockingly undervalued” and could fetch $70 per share, more than double Monday's closing price, from a strategic or private buyer.
Yelp shares increased by over 23% since the start of the year, but are well below their all-time highs set nine years ago.
The letter also recommended that Yelp consider a merger tax-free with home project services provider ANGI (ANGI), formerly Angie's List, which Semler said would create “a $500 million home services market power “. Angi shares soared nearly 8% on Tuesday's news.
Semler noted that TCS owns 4% of Yelp's outstanding shares, making him one of the company's top five shareholders.
Yelp does not have not immediately commented on the letter.
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Source: investopedia.com
