Recent reports show that Yahoo Inc co-founder Jerry Yang is interested in striking a deal with private equity firms, taking the $20 billion international company off of public markets.
This type of deal means rolling over Yang’s shares in Yahoo, which are currently at 3.63%, as well as the 5.90% shares of the other founder, David Filo.
After September saw the internet company firing their CEO Carol Bartz and receiving multiple expressions of interest for buying the company, Yahoo has been working with advisers Goldman Sachs on a strategic review. This could include the sale of the company.
Jack Ma, CEO of Chinese internet giant Alibaba, expressed that he is “very interested” in the prospect of buying Yahoo, as it would help Alibaba expand into the U.S. market.
Microsoft Corp, along with Silver Lake Partners, and Providence Equity Partners are considering bidding for Yahoo as well. Bain Capital, an investment firm that has poured billions into buying up media outlets such as Clear Channel Communications and The Weather Channel, is also reportedly interested in Yahoo.
For some at Yahoo, the unsolicited interests in buying the company mean a second chance at redemption from a former buyout deal gone bad.
Three years ago, Microsoft offered $33 per share, or $47.5 billion to Yahoo, which is currently only estimated at $20 billion in worth. The Yahoo board turned down the bid, to the regret of many. Friday’s trading saw Yahoo’s shares closing at just $15.47.
A profitable takeover may be just what Yahoo needs, as it has been steadily losing relevance and its share of the internet market for the past two years.
While it commanded 19% of internet searches 2 years ago, it had dropped to 16% this August. In contrast, its rival Google continues to hold the lion’s share at 65%, while Microsoft’s share has grown from 9% to 15% in the same period.
Yahoo has also experienced a decline in the total amount of time spent at their websites.
As a public company, Wall Street is hurting Yahoo with low stock prices because it is not a growth company. The low share prices mean not enough currency for acquisitions. Being purchased by a private equity form may mean that Yahoo has time to fix its floundering reputation away from the punishment of share price drops.