Yahoo Eyes Minority Investment From Microsoft, Others

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Stifel, Nicolaus analyst Jordan Rohan calls such a deal “not ideal, but not awful either.”

NEW YORK – Yahoo’ board will consider minority investment offers from bidder groups, including one led by Microsoft and private equity firm Silver Lake, as early as this week, the New York Times reported.

The Times said that bids were due at the close of business Monday and that the group including Silver Lake and Microsoft was a leading contender, with others, such as TPG Capital, also having shown interest in a bid.

Yahoo seems to favor the minority investment scenario over an outright sale, but also remains open to such a deal, the paper said.

Under a minority investment, an investor or consortium would buy a stake of as much as 20 percent. Yahoo would then take on debt to pay for a stock buyback. When including a roughly 10 percent stake held by Yahoo co-founders Jerry Yang and David Filo, such a deal would effectively give the investor group a majority holding, the Times said.

Stifel, Nicolaus analyst Jordan Rohan on Tuesday called such a recapitalization with minority investors "not ideal, but not awful either." He added: “For Yahoo shareholders, the outright sale of the company would be preferable to a leveraged recap, but much harder to orchestrate.”?

AllThingsD reported that powerful and respected venture capitalist Marc Andreessen, who has held talks about joining the Microsoft-Silver Lake bid, could play a key board role or even become chairman of Yahoo in a move that could allay investor concerns. Andreessen was co-founder of Netscape and sits on the boards of such tech companies as Facebook.

Yahoo has been considering various strategic options since firing CEO Carol Bartz.


Twitter: @georgszalai