Yelp Inc after unveiling its strategy to improve returns has caused the SQN Investors LP to back off its threat of challenging the company’s board of directors, according to a letter SQN sent to Yelp on Thursday.
The hedge fund retreated as company showed its commitment for higher returns which was the main motive of the SQN’s warning.
Yelp, an online review company, was facing criticism for not putting enough efforts to cope up with its declining advertising revenue, and last month company started focusing to address the same by announcing its plans of saving costs and addition of three independent directors to its board.
SQN, in its letter sent to the company on Thursday, welcomed the company’s plans of delivering double-digit revenue growth for the next five years, changes to be made in its board and its promise to buy back stock of worth $500 million.
Taking the several changes made or promised to make by the company into considerations, SQN is ready to support new changes in the board and during election at the 2019 Annual Meeting will avoid nominating any candidate for the director, Amish Mehta, SQN’s founder, wrote.
SQN is a hedge fund which mostly invests in technology companies and usually not acts as an activist investor and after outlining a business revival plan by the Yelp, the investment fund hold its plan to nominate its own candidates for Yelp’s board of directors, stated the hedge fund in its letter sent to the company ahead of director nomination deadline.
But the hedge funds reiterated its stance of the company to come up fulfilling its recently made commitments.
Earlier, SQN called for a decision to sell the company, but in its current letter the hedge fund moderated its previous proposal but cautioned that in case of management failed to deliver as per its committed turn around, selling the company will still be the option.