Yahoo tipped to sell Asian assets, pay shareholder dividend
Yahoo is likely to close the door to potential private equity suitors by divesting its Asian assets and redistributing the proceeds to shareholders. The redistribution might take the form of a special divided or share buyback.
The US internet company has been a target for private equity investors ever since CEO Carol Bartz departed in early September. This has prompted a 28% surge in Yahoo's share price, pushing up the cost of any acquisition, Bloomberg reported. Jerry Yang, co-founder of the company, stressed at a recent Hong Kong conference that all options would be considered with the intent "not to put ourselves up for sale."
A host of private equity and strategic players have been linked to the asset, including Silver Lake Partners, Canada Pension Plan Investment Board, Russia's Digital Sky Technologies (DST) and Microsoft. Jack Ma, founder of Chinese e-commerce firm Alibaba Group - in which Yahoo holds a 40% stake - also threw his hat in the ring, saying he was interested in buying Yahoo and had held talks with other potential buyers.
These potential buyers reportedly include Silver Lake, DST and Temasek Holdings. Last month, the three companies 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.
Ma doesn't lack potential financial partners should Yahoo seek to exit its interest in Alibaba. And it has been said from the outset that private equity firms considering a bid for Yahoo would prefer to do so minus the Asian assets as this would create a smaller and simpler acquisition, supposedly with fewer tax implications.
Yahoo's other Asian interest is a 35% stake in Yahoo Japan, which has a total market value of $19 billion. Softbank Corp, which already owns 40% of the asset, is the logical buyer and the parties are said to have been in talks for nine months, with tax considerations the major obstacle.
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