Yahoo investors stand by amid speculation of $25bn bid from Chinese partner

A$25bn bid for Yahoo would be one of the biggest buyouts of all time, but the finance could be tricky

New York

Investors in Yahoo are once again betting on a takeover of the ailing internet pioneer, amid speculation that private equity groups are planning to back a bid from the company's Chinese business partner Jack Ma.

Reports that Bain Capital and Blackstone were considering financing a $25bn (£16bn) takeover helped push Yahoo shares to a six-month high at one point, though Mr Ma said he had not decided to launch a bid and analysts questioned the feasibility of the deal.

A full bid for the company is just one in a string of ideas on the table for Yahoo's future, almost three months after it fired its chief executive, Carol Bartz, and launched a strategy review.

Elements of Yahoo's board are believed to favour taking a smaller strategic investment from a consortium of technology industry players, though that could anger existing shareholders who would see their holdings diluted a takeover premium dashed.

If Yahoo pursues that path, it will be the second time in four years that hopes of a takeover come to naught. In 2008, when Yahoo shares were double their present value, Microsoft made a $46bn offer only to be rebuffed by Yahoo's board.

Yahoo owns 40 per cent of Jack Ma's Chinese internet company Alibaba, and Mr Ma has made no secret of his desire to buy back that stake. Yahoo also owns 35 per cent of Yahoo Japan. Softbank, a Japanese internet group with stakes in Yahoo Japan and Alibaba, is considering joining the takeover consortium with Mr Ma, Blackstone and Bain.

Jerry Yang, Yahoo founder and board member, is also said to be trying to find financing for a bid, which would have to be pitched at about $20 per share to gain approval, analysts said. After initially spiking above $16.70, Yahoo shares pared some of their gains to trade at $16.20 at lunchtime in New York.

Convincing private equity buyers to make a full bid for Yahoo and finding banks to finance the transaction could both be tricky, BGC Partners technology analyst Colin Gillis said. At $25bn, it would be one of the biggest buyouts of all-time, with large amounts of debt piled on a company whose competitive fortunes have ebbed in recent years. Yahoo has lost market share to Google and Facebook, both in the amount of time internet users spend on its sites and in the amount of money advertisers spend. "Yahoo is not the perfect target for private equity," Mr Gillis said. "It is not a consumer staple stock. It is always just one click away from being wiped out."

Microsoft, which later merged its search advertising business with Yahoo, is now part of a consortium bidding for a less-than-20 per cent slice of its rival-turned-partner. That consortium, led by Silicon Valley venture capital group Silver Lake Partners and Andreessen Horowitz, led by Netscape founder Marc Andreessen, would pay $16.60 per share and help choose the new Yahoo chief executive.

Another consortium, led by private equity firm TPG, bid more than $17 per share, it is believed, but some members of the board favour the Silver Lake despite its lower value, citing the strong connections of the players involved.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there