An activist investor has called on AOL, the struggling digital media company, to consider five new board members and explore the sale of its patent portfolio, which it said could be worth up to $1bn.
Starboard Value LP, which owns 5.2 per cent of AOL, said it was "troubled that the company remains closed-minded to alternative value creation initiatives, and instead appears solely focused on pursuing the status quo".
The move follows a letter Starboard sent to AOL in December, when it expressed disappointment with the company's direction. AOL is attempting to kick-start its online advertising business with a premium content strategy that includes sites like the Huffington Post and TechCrunch, while managing the decline of its internet access service.
Starboard's nominees include Jeffrey Smith, chief executive of Starboard; Ronald Epstein, head of a company that helps sell patents; Steven Fink, who once managed investments for Oracle chief executive Larry Ellison; and two other executives with digital media experience.
AOL said it had met Starboard several times and offered to work with the investor "to help shape" its board's composition and size. One person familiar with the talks said AOL had agreed to consider "qualified" board candidates but disagreed with Starboard's nominees.
AOL said it had already begun reviewing its patent portfolio last year, before Starboard's first letter.
Starboard's latest statement came a day before AOL's deadline for nominating directors for its annual meeting, expected in May. AOL stock is up 80 per cent since its 2011 low and up 20 per cent this year but still below its valuation when it was spun off from Time Warner in December 2009.
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