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A consortium of big capitalists: Bain Capital and Blackstone Group, along with various Asian partners is getting ready to bid for Yahoo Inc. for a possible $25 billion deal.
The consortium includes Japan’s Softbank and China’s Alibaba. E-commerce giant Alibaba’s main interest in participating in the bid is rooted in its desire to buy back the 40 percent stake from Yahoo. However, according to Alibaba Group representative John Spelich, the company is unsure of whether to participate in the whole company bid or not, and is still considering various options.
Yahoo’s shares is valued above $20 billion after shares closed at $15.71 last Wednesday on the New York Stock Exchange and increased to $16.72 in after-hours trading.
Potential Players in the Yahoo Inc. Deal
According to an analyst from JP Morgan, what is definite is Alibaba wants to take its stake back from Yahoo, and will do whatever is necessary to make it happen. As for being able to have sufficient money to close the deal, Alibaba may resort to borrowing funds or finding a buyer, potentially using Yahoo Inc.’s asset and Alibaba’s asset as collateral. Founder and CEO of Alibaba Jack Ma should have no problem financing the deal, being a billionaire himself and having ties with groups of investors and several of the worlds’s known private equity funds.
Yahoo Inc. currently has 1.24 billion outstanding shares and bid on Yahoo Inc. of anything above $20 per share is easily a deal worth $25 billion, and if all goes well for Yahoo, the deal can probably be the biggest buyout using a considerable amount of borrowed money in recent years.
Yahoo and other companies participating in the acquisition decline to comment on the upcoming deal.
Yahoo’s board received two offers already for a minority stake, and these offers came from the group of Silver Lake and software giant Microsoft Corp., and TPG Capital.
Thomas H. Lee Partners, a private equity company, expressed interest in purchasing Yahoo’s U.S. branch. Other equity partners interested in the Yahoo acquisition are Hellman & Friedman and Providence Equity Partners.
Blackstone and Bain, two strong buyout firms with records of teaming together in acquiring companies are setting their sights on Yahoo Inc. These two firms acquired Michaels Stores Inc. in 2006 and in partnership with NBC Universal, acquired the Weather Channel in 2008.
Yahoo’s Growth Reaching a Plateau
Yahoo has reached a plateau when it comes to growth largely because of strong competitions from giants Google and Facebook. At present, Yahoo has no permanent CEO. Last September, Yahoo’s board of directors fired CEO Carol Bartz. The board also initiated a strategic evaluation, which was further complicated by the fact that there are many players involved with a say in the matter, namely co-founders and partners David Filo and Jerry Yang, shareholders and the board. Each of these players has different agendas.
Mr. Yang is leaning towards making Yahoo a private company and is considering dealing with private equity firm partly because he sees this as the best way to retain involvement with the company.
Kimberly is a researcher, writer, business woman, and contributor at entrepreneurweek.com blog network. She may be reached at eweekcomauthor@gmail.com.
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