A bidding war for a potential buy of Yahoo is in the preliminary stages. While Microsoft, Alibaba, and several purchasing groups ready their figures and hunt for partners, Yahoo's Jerry Yang assures us that a buyout is only option being examined.
Yahoo Opens the Floor to Bids
We previously reported the potential Yahoo sale, which targeted anyone who might be interested. At that time, Microsoft and Alibaba seemed to be amongst the potential bidders. Now the list has expanded and solidified.
In addition to Microsoft, Providence Equity Partners and Hellman & Friedman ("buyout shops") seem to be interested, according to a Reuters report.
Meanwhile, in the face of potential bidding crossfire, Microsoft and Alibaba are both seeking support from other investors to strengthen their bids. According to The Wall Street Journal, Microsoft is looking to partner with the Silver Lake Partners investment group and the Canada Pension Plan Investment Board, while Alibaba is searching for private equity groups.
According to early information, Microsoft's bid is likely to reach approximately $18 per share. Other figures for the potential purchase price has yet to be announced.
Incentives to Sell and Buy
The buyout of Yahoo isn't exactly "imminent." It's a potential route that the company is looking at. According to Yahoo co-founder and current director Jerry Yang, who was a interviewed at AsianD, "The intent is to look at all the options."
Other options include selling select portions of the company, refocusing current properties, and finding new ways to take advantage of Yahoo's 700 million monthly visitors. Despite the difficulties the company faces, Yang insists that Yahoo is a "premier digital media company." He also notes that, as a sale isn't certain, the company has started its search for a new CEO.
Regarding Microsoft's interest, Microsoft CEO Steve Ballmer touched on company interactions with Yahoo during his interview at Web 2.0. He stated that "there are a lot of great things at Yahoo," and that "we know they're going through their issues." In the end, he indicated he "was proud to call them a partner." When asked about buying Yahoo today, Ballmer never answered the question directly, but indicated he held a strong and stable position on the subject.
Microsoft's motives are certainly there: the company would get a better presence and more branding opportunity with a Yahoo buyout (now, they take only a small cut of the search revenue). Yahoo also holds several powerful properties that could be integrated into Microsoft equivalents; Yahoo Mail remains popular, Yahoo Answers is a strong social platform, and the core site offerings (entertainment, news, and finance, among other elements) remain popular. Additionally, Yahoo's hold in Japan could help Microsoft work into the Asian market.
Meanwhile, Alibaba – a diverse internet company based in China – would be buying its own freedom by investing in Yahoo (Yahoo owns a 40 percent stake). Alibaba has previously attempted to buy out that stake, and buying Yahoo outright would certainly be an alternative path to doing so. Alibaba could also use Yahoo's U.S. presence as a way to cross the Ocean while tapping into Yahoo's engineering talent to expand their own technologies.
In any case, Yahoo still resides in a state of near suspended animation; while it continues to evaluate options, including a sale, the company marches forward without a CEO or even a clear sense of direction.