Buyout Rumors Continue to Swirl Around Yahoo!

Joel Anderson |

1688.HKG, 9984.TYO, GOOG, MSFT, BX, YHOO, Yahoo, Softbank, Alibaba, Microsoft, Bain Capital, Silver Lake, TPG Capital, Blackstone Group, buyout, minority stake, shares, internet, China, JapanAnother day, another rumor about who is going to buy Yahoo (YHOO). With everyone from Google (GOOG) to Microsoft (MSFT) having been previously named as potential suitors, rumors Wednesday seemed to point towards a new consortium of companies including Alibaba Group (ALBCF), The Blackstone Group (BX), Bain Capital, and Japanese firm Softbank (SFTBF).

More Rumors Push up Shares

The rumored buyout has the consortium paying $20 a share or more, and helped to push stock in Yahoo up about 3 percent. As rumors continue to swirl, the Yahoo board will clearly have a great deal to think about. Private equity firm Silver Lake has reportedly teamed with Microsoft and others to buy a 20 percent minority stake in the company at $16.60 a share, while still more rumors have TPG Capital offering $1 per share more in a similar deal. With all three deals in the works, it isn't clear where Yahoo shares are going to land. "A 20% private equity investment would complicate things even more," said Herman Leung an analyst with Susquehanna Financial Group. He added, "It doesn't really solve what investors are hoping for the most, which is monetization of their Asian assets."

Alibaba Looking to Recover Shares from Yahoo

A potential deal to buy Yahoo would most likely allow for Bain and Blackstone to control US operations and Softbank to take over Yahoo! Japan. However, Alibaba's interest appears to be driven by the desire of CEO Jack Ma to repurchase the 40 percent stake in his company that Yahoo purchased in August of 2005. "Alibaba definitely wants to get its stake back from Yahoo, so whatever that can make that happen, they will try for it," said Hong Kong-based JPMorgan analyst, Dick Wei.

Jack Ma, who also founded Alibaba, previously stated at a talk at Stanford University that his company would be "very interested" in buying Yahoo outright, continuing “We are very interested in Yahoo. Our Alibaba group is important to Yahoo, and Yahoo is important to us… All the serious buyers interested in Yahoo have talked to us.” However, whether or not the consortium can work out a deal on financing is yet to be seen. A share price of $20 would value the company at approximately $25 billion. “Anyone who is surprised that Jack Ma would like his stake back from Yahoo should not be surprised,” BGC analyst Colin Gillis said. “What’s not clear is how he could get a deal done.”

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
BX The Blackstone Group L.P. Representing Limited Par 29.52 -0.29 -0.97 12,007,729
CBSA CBS Cl A n/a n/a n/a 0
GOOG Alphabet Inc. 789.29 12.87 1.66 1,821,914
YHOO Yahoo! Inc. 41.76 0.35 0.85 6,836,112
MSFT Microsoft Corporation 61.97 0.96 1.57 27,349,356

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