Yahoo! (YHOO) Shares Higher as PE Firms Could Be Closer to Gaining Minority Stake
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Shares of Yahoo! (Nasdaq: YHOO) are moving 1.25 percent higher in pre-market trade Friday following reports the company may be in talks to sell a significant portion of itself to private equity.
Firms like KKR (NYSE: KKR) and TPG Capital may acquire up to a 20 percent stake in the Internet search giant, rumors suggest. The move may lead to a potential takeover of the whole company, Reuters noted.
KKR and TPG may also team-up with co-founders Jerry Yang and David Filo -- who collectively own 9.5 percent of Yahoo! -- for a potential deal.
In taking a minority stake, the PE firms will position themselves well to take over a larger portion once leverage finance markets open up.
Confidentiality agreements might be signed as early as this morning or afternoon. Another source has said a deal will be announced next week.
Other firms like Blackstone (NYSE: BX), Providence Equity, and Bain Capital have opted against signing a nondisclosure agreement.
The deal might also be structured as a private investment in public equity (PIPE) deal, often used by small- and mid-cap companies which have difficulty raising capital in public markets. PE firms in this deal typically get a more favorable price on equity than the public. With Yahoo!'s market value currently at about $20 billion, it's not entirely clear if this sort of deal could be struck.
Hurdles to the deal include the ability of Yang to turn the company around, shareholder demands and disclosure, and Yahoo! needing to keep its Asian assets. In holding on to Asian assets, Yahoo! might face resistance from Alibaba and others, which have expressed interest in gaining a hold of Yahoo! and might resist a sale to PE firms.
Firms like KKR (NYSE: KKR) and TPG Capital may acquire up to a 20 percent stake in the Internet search giant, rumors suggest. The move may lead to a potential takeover of the whole company, Reuters noted.
KKR and TPG may also team-up with co-founders Jerry Yang and David Filo -- who collectively own 9.5 percent of Yahoo! -- for a potential deal.
In taking a minority stake, the PE firms will position themselves well to take over a larger portion once leverage finance markets open up.
Confidentiality agreements might be signed as early as this morning or afternoon. Another source has said a deal will be announced next week.
Other firms like Blackstone (NYSE: BX), Providence Equity, and Bain Capital have opted against signing a nondisclosure agreement.
The deal might also be structured as a private investment in public equity (PIPE) deal, often used by small- and mid-cap companies which have difficulty raising capital in public markets. PE firms in this deal typically get a more favorable price on equity than the public. With Yahoo!'s market value currently at about $20 billion, it's not entirely clear if this sort of deal could be struck.
Hurdles to the deal include the ability of Yang to turn the company around, shareholder demands and disclosure, and Yahoo! needing to keep its Asian assets. In holding on to Asian assets, Yahoo! might face resistance from Alibaba and others, which have expressed interest in gaining a hold of Yahoo! and might resist a sale to PE firms.
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