Yahoo Inc. (YHOO) is an attractive company for many different suitors. It has a market cap of $20B, $1.4B in cash, and only $134K in debt as of its Q3 10Q. It also produces EBITDA over the $1B mark. While there have been rumors about potential suitors, no one has been able to pinpoint who it might be. One thing is for sure, the longer we wait, the less any potential deal might bring.
Yahoo has been struggling and the board finally decided to fire CEO Carol Bartz. Almost instantly shares rebounded on buyout speculation. Any buyout of Yahoo to have a remote chance of success would have to be over $20B, making the collection of private equity financing difficult. The largest buyout financing since the crash has been only $7.5B.
One article suggests that Google Inc (GOOG) might finance the deal. But it goes on to say that any Google involvement would likely draw antitrust issues and I tend to agree. While all these rumors have been flying, Yahoo has yet to mention anything about a new CEO. They also have yet to publicly announce any sort of plan to guide them out of their struggles and back into the innovative company they once were.
Yahoo is in talks to sell what some analysts are calling its most valuable asset, a 40% stake in Alibaba Group (ALBIY.PK). If they sell they will have a significant amount of cash, but that would have to be coupled with another strategic investment that serves Yahoo even better than this one.To continue reading, click here.