Yahoo founder refuses to rule out sale to Alibaba, private equity
Yahoo co-founder Jerry Yang has refused to rule out the possible sale of the company to Alibaba Group’s Jack Ma or to a private equity interests. “There are plenty of options,” he told a conference in Hong Kong Wednesday.
Yang's comments came as sources told The Wall Street Journal that Silver Lake Partners is working with Canada Pension Plan Investment Board and Microsoft on a proposal to buy Yahoo. Yang noted that Microsoft is a very important partner for Yahoo, without elaborating. Three years ago, Yahoo's board turned down a $33 per share, or $47.5 billion, acquisition offer from Microsoft. The internet company's stock is now trading at about half that value.
Earlier this month, Ma said he was interested in buying Yahoo in its entirety - not just the 40% stake the US internet firm holds in Alibaba - and has held discussions with other potential buyers about options.
Temasek Holdings is said to be one the potential buyers with whom Alibaba has held talks. It is suggested that a tie up between Alibaba and Temasek could be part of a takeover bid for Yahoo launched by Silver Lake Partners and Russia's Digital Sky Technologies (DST).
Last month, Silver Lake, DST and Temasek invested in Alibaba alongside Yunfeng Capital, a private equity firm set up by Ma. The transaction, structured as a tender offer to employee shareholders and option holders as well as certain other shareholders, is said to be worth up to $1.6 billion. It values Yahoo's holding in the Chinese company at nearly $13 billion.
The idea of a joint bid for Yahoo by Silver Lake, DST, Alibaba and Temasek - with the latter two taking Yahoo's Alibaba stake - makes theoretical sense in the light of reports that private equity players would only consider making an offer for the US firm if the Asian assets were sold. This would create a smaller and simpler acquisition, supposedly with fewer tax implications.
Yahoo is considering options for unloading its other Asian asset, a 35% stake in Yahoo Japan, with an acquisition by Softbank or a management team seen as the most likely outcome. The asset, in which Softbank has a 40% interest, has a total market value of about $19 billion and net cash of $2 billion.
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