About those Yahoo buyout rumours | FT Alphaville

About those Yahoo buyout rumours

Shares in Yahoo are blazing in pre-market trading:

That’s $17.21 per share versus a Wednesday close of $15.25 per share …

…after the Wall Street Journal reported that several private equity companies are mulling bids:

Silver Lake Partners and Blackstone Group LP are among the firms that have expressed interest in teaming up with AOL to buy Yahoo or trying to take it private on their own, these people said. They added that at least two or three other firms could be interested in participating if a formal buyout proposal is drawn up.

One of the scenarios under discussion among the buyout firms is a complex deal in which China’s Alibaba Group would buy back Yahoo’s roughly 40% stake in Alibaba, the people said. Some of Yahoo’s other assets would also be sold off to interested media or technology companies, and the remaining company would be of a much smaller valuation that private-equity firms could get financing for, one of the people said.

But sector watchers are much less certain anything will come to pass, particularly if the plan really is a shrink-to-buy leveraged buyout.

Here’s the initial view from UBS:

— In our opinion, the cofounders may be amenable to maintaining an independentprivate company. But given the significant return potential of Alibaba as well as management’s belief that Yahoo is undervalued, we believe it is unlikely that Yahoo would sell out for less than $22-25/share (representing a 44-64% premium to Wednesday’s $15.25 close). This represents a ~8-10x 2011 est. EBITDA multiple.

—  We have many unanswered questions, such as the tax implications of asset sales in Asia. There is also regulatory risk. We do believe this provides a floor for the stock in the near-term, and we will continue to monitor details as they emerge.

And something more substantial from Olivetree Securities:

Talk about trying to fit a camel through the eye of needle. AOL is $2.6bn mkt cap, YHOO is $20.5bn mkt cap at $15.25 and supposedly won’t sell for less than $24 per share. It’s an obvious deal isn’t it? Supposedly AOL and Silverlake do some sort of reverse merger with YHOO, put Armstrong in as CEO and Bartz in as Chairman and sell off the Alibaba stake (back to Alibaba) for $10bn and other assets to shrink the company down to size.

A YHOO deal might well happen, this probably won’t be it. Yang was very silly last time when he didn’t take the MSFT $$, perhaps he won’t make the same mistake twice.

In other silly rumours, supposedly Apotheker’s first move as HPQ CEO would be to get ultimate revenge on his humiliating exit from his previous employers by buying them. Possible, yes. Probable, no. If SAP sell I suspect it is to MSFT or IBM. And I don’t think they do it yet.

And there was us thinking the silly season was over.

Related link:
Yahoo Said to Hire Goldman to Handle Takeover Approaches – Bloomberg