Reports of a possible Yahoo sale grew stronger with Third Point LLC, Yahoo’s investor, demanding two more board seats and also requesting Jerry Yang, co-founder of Yahoo, to resign as Yahoo’s director. This comes after several private equity firms expressed interest in buying the company, leading to Yahoo signing confidentiality papers. Daniel Loeb, CEO of Third Point objects to a transaction with private equity firms as when Yang’s and David Filo’s shares (co-founders of Yahoo) are combined it would create a controlling stand. The New York firm lashed out that it will not tolerate any proceeding which allows insiders an opportunity which belongs to all of Yahoo’s shareholders.
Sources reveal that Silver Lake Partners, Bain Capital, Hellman & Friedman, Blackstone, and Providence Equity Partners are the five firms who are interested in Yahoo but have not signed the agreement. They are reportedly trying to buy out Yahoo along with its Asian collaborations Alibaba Group and Softbank Corp. They are willing to raise up to $1 billion in equity for the acquisition. This would enable Yahoo to create partnerships with social media tools and go mobile, which would help turn around the company’s strategy without any paradigm shift in the company’s ownership.
Yahoo replied to Third Point saying that the Yahoo board is strategically reviewing the company’s position for the benefit of all its shareholders. Incidentally, this is not the first time Third Point has made such a demand; it had called on Chairman Roy Bostock to resign after firing CEO Carol Bartz. In a losing race with Facebook and Google, the company is still looking for a new CEO and with it, a change in their strategy. Yahoo recently appointed Goldman Sachs and Allen & Co to create a comprehensive review to get the company back on track. Yahoo’s share continued to decline on the back of buyout reports, falling by 1.6% to $15.24.
Yang insisted last month that the company isn’t up for sale. He said that he believes in exploring all the options, for the board as well as for the shareholders. This was in response to Alibaba Group’s CEO, Jack Ma comment that they are interested as well in buying Yahoo. Alibaba is China’s biggest e-commerce company and is Yahoo’s Asian partner. Selling off Asian assets to joint venture partners seem a viable option to please shareholders, but with current market scenario, Asian assets are perceived to be more interesting.
Meanwhile, Loeb is aggressively pursuing the two board seats. He insists that they be awarded the seats left vacant by Yang’s and Bostock’s departure from the board.
