Sources told the Wall Street Journal that as many as five private equity firms have expressed interest in partnering up with AOL to purchase Yahoo, or even go it alone.
(WEB HOST INDUSTRY REVIEW) — Global Internet services and media company AOL (www.aol.com) and a handful of private-equity firms are considering proposing an offer to buy search engine and other Internet services firm Yahoo (www.yahoo.com), according to a report from the Wall Street Journal that cites unnamed sources familiar with the matter.
According to the WSJ’s Thursday article, as many as five private equity firms have expressed interest in partnering up with AOL to purchase Yahoo, or even pursue it alone, if Yahoo drafts a formal buyout proposal. Silver Lake Partners (www.silverlake.com) and Blackstone Group (www.blackstone.com) were among the firms that reportedly expressed such an interest.
Founded by a former general partner of the Blackstone Group, Silver Lake recently made a strategic investment in Brazilian Web hosting and cloud computing services provider Locaweb (www.locaweb.com.br), a pioneer delivery of IT services over the Internet in Latin America.
Forging a combined company out of AOL and Yahoo – both widely known Internet brands – could, however, be difficult, the Post article notes, especially given the fact that AOL, recently divorced from Time Warner, has a far smaller market value ($2.68 billion) than Yahoo’s $20.56 billion.
Late last month, AOL announced deals to acquire social software start-up Thing Labs (www.thinglabs.com), the TechCrunch (www.techcrunch.com) network of sites, and the Web’s largest video content syndication platform, 5min Media (www.5min.com).
Some are skeptical, including Shira Ovide, who wrote in a WSJ blog that Yahoo has been “circled by suitors” – most notably Microsoft – for the past few years, only to turn down these offers.
In 2008, Yahoo! failed to negotiate a $47 billion acquisition with Microsoft, causing Yahoo!’s market value to fall by more than $20 billion. Added to Yahoo!’s troubles was a separate and failed partnership with AOL, and an advertising revenue-sharing deal Google (www.google.com), which dissolved in late 2008 that factored into co-Founder Jerry Yang’s decision to resign as CEO in favor of experienced technology executive Carol Bartz.
Waking up to the news that an acquisition could be in the works, investors wagered on Yahoo shares, CNNMoney.com reported. ThinkEquity (www.thinkequity.com) analyst Aaron Kessler said in an investment note that the rumors could be a catalyst to drive up the value of Yahoo’s shares. A merger, he noted, would “provide clear revenue and operating synergies on both display and search.” He, too, however, is not entirely optimistic, noting that a merger may disrupt the company’s improved bottom-line performance on course for 2012, and it could cause Yahoo to sell its 40-percent stake in Chinese online trading platform Alibaba (www.alibaba.com), which he calls Yahoo’s “most valuable long-term asset.”
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