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Yahoo reshuffles board in truce with rebellious shareholder

Yahoo has reached a truce with an activist investor threatening to oust CEO Marissa Mayer and the rest of its board, removing a major distraction as the company evaluates bids to buy its Internet operations.

The agreement announced Wednesday will give the rebellious shareholder, Starboard Value, four seats on Yahoo's board. The company is diluting Starboard's voting power, though, by expanding its board from nine to 13 directors for the next two months.

The board will be pared to 11 directors within two months under the agreement. Yahoo will pay Starboard up to $2 million as a reimbursement for legal fees and other expenses the New York hedge fund incurred while preparing to...