Yahoo’s third round could lure big suitors
The second round of bidding for Yahoo may have come to an end, but that doesn’t mean the roster of potential buyers is final.
A third, and likely final, round of bids for the troubled Sunnyvale, Calif.-based Net company’s core business and other assets is expected to begin next week. But don’t discount the entry of additional bidders in this final round.
“Keep in mind that after the first round of bidding closed, nobody expected Warren Buffett or Dan Gilbert to be involved in this,” said Eric Jackson, managing director of investment firm SpringOwl, a Yahoo shareholder that has pushed the company to replace senior management and slash its workforce.
A consortium that includes Buffett’s firm Berkshire Hathaway and Gilbert, founder of Quicken Loans and owner of the NBA’s Cleveland Cavaliers, emerged as bidders in mid-May, even though initial bids were submitted in April.
Starboard Value and other activist investors urged the company to consider a sale after Yahoo abandoned plans for a spin-off of its stake in Chinese e-commerce giant Alibaba and began considering a tax-free spinoff of the company’s core assets. Shareholders have voiced concerns because Yahoo CEO Marissa Mayer’s nearly four-year turnaround plan has gained little traction.
Other bidders include strategic buyers: AT&T, as well as private investment firm TPG, and an investment group including Bain Capital, Vista Equity Partners and former Yahoo CEO Ross Levinsohn.
“I think it’s still possible we could hear from Comcast or somebody like a Fox as a potential strategic bidder in this last round,” said Jackson, who expects Yahoo’s board to announce a decision in early July.
Yahoo did not respond to a re-
quest for comment.
Yahoo’s board of directors is expected to meet Friday to select bids that will move on to a final round, CNBC reported Thursday, and conclude the auction by midJuly.
The company’s strategic review committee is weighing several bids of $5 billion or more for the purchase of its core business, CNBC’s David Faber reported, citing persons familiar with the situation.
The Wall Street Journal reported that several potential buyers planned bids of $2 billion to $3 billion.
These numbers reported by CNBC “make more sense,” said SunTrust Robinson Humphreys Internet equity analyst Robert Peck. He has estimated that Yahoo’s core business could fetch as much as $6 billion, with real estate and other assets included.
Yahoo shares closed Thursday up 1% to $37.35.
Verizon, long considered the likely winning bidder, submitted a bid of “a bit more than $3.5 billion,” Faber said, quoting unnamed sources. Some said that there is discussion as to whether Verizon would make a planned third and final round of bidding, he said.
“Keep in mind that after the first round of bidding closed, nobody expected Warren Buffett or Dan Gilbert to be involved in this.” Eric Jackson, of SpringOwl