PE firms close in on Yahoo acquisition
Several prospective buyers of Yahoo have signed confidentiality agreements in order to get a closer look at the company’s finances.
While at least five private equity firms have complied with the requirement, others declined as it would prevent them from forming consortiums, Reuters reported, citing sources familiar with the matter. The holdouts are said to include Silver Lake Partners, Providence Equity Partners, Bain Capital, Hellman & Friedman and The Blackstone Group. Sources say these firms are looking into a transaction in which Yahoo's Asian joint venture partners, Alibaba Group and Softbank Corp., also participate.
The US internet company said that interested parties had to sign non-disclosure agreements by Friday in order to get a close look at its finances. However, the deadline could be extended into this week to allow other firms to participate. Other private equity firms reportedly tracking the deal include KKR, TPG Capital and The Carlyle Group, while Alibaba Group, Microsoft and Google are the most prominent strategic parties.
Yahoo is also exploring other options, with CEO Jerry Yang saying at a recent Hong Kong conference that the intent was "not to put ourselves up for sale." The board is considering selling a 20% minority stake in the company, which would see the purchaser and co-founders Yang and David Filo increase their combined stake to 40-45% through a large share buyback. This would effectively buy the company time to explore potential tie-ups with other tech companies.
Another option is to divest the Asian assets and redistribute the proceeds to shareholders. Yahoo's 40% stake in Alibaba Group and 35% interest in Yahoo Japan are estimated to be worth $13 billion and $19 billion, respectively.
The US internet company has been a target for private equity investors ever since CEO Carol Bartz departed in early September. Jack Ma, Alibaba's founder, said last month that he was interested in buying the entire company and had spoken to potential partners. These are thought to include Silver Lake and Temasek Holdings.
Silver Lake, Digital Sky Technologies, Temasek and Yunfeng Capital, a VC fund set up by Ma, last week closed a $1.6 billion investment in Alibaba Group structured as a tender offer to employee shareholders and option holders.
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