So Yahoo is up for sale. After dragging itself along for years and years in a time and age that had it left behind, the company seems to be looking for a sell out before it’s value drops even further. And it seems like Microsoft has also started exhibiting some interest in its fate, albeit in roundabout ways.
According to a report published by Re/Code, Microsoft executives have been meeting with those of private equity firms. While such a meeting would usually be no cause of concern, both the parties have apparently been putting their heads together over Yahoo.
What’s more, Microsoft may also be looking to advance certain funds to these firms — substantial funds in fact — should they be willing to buy Yahoo out.
Although the company’s (Yahoo’s) commitment to being sold is one that has been brought into question from various quarters. The company’s decision to considering a sell out was brought into focus by Yahoo chairman Maynard Webb who had in a statement, said that,
The Board also believes that exploring additional strategic alternatives, in parallel to the execution of the management plan, is in the best interest of our shareholders. Separating our Alibaba stake from our operating business continues to be a primary focus,and our most direct path to value maximization. In addition to continuing work on the reverse spin, which we’ve discussed previously,we will engage on qualified strategic proposals.
Where qualified strategic proposal basically stands for a call to private equity firms to come buy it.
However, the CEO Merissa Meyer, who has been on the offensive ever since she took up the office and a firm proponent of moving forward via acquisitions and new ideas and so on, seems to have other ideas on the topic.
Today, we’re announcing a strategic plan that we strongly believe will enable us to accelerate Yahoo’s transformation.
Blessed is the English language, leaving Yahoo stuck between Webb’s strategic proposals and Meyer’s strategic plans — An impasse that is still visible in the company’s almost languid response to equity firms, even though the company has decided to open itself to buy out proposals.
However, it seems like at least some significant investors have had enough and just want to sell the company for as many bucks as possible before moving on. Indeed Starboard Value, one of the shareholders in Yahoo Inc, went as far as to call out for a replacement of the company’s board of directors.
As per Jeff Smith from Starboard Value, who said that a new board would bring
Credibility to a process that has been publicly criticized repeatedly for being too slow, fraught with conflicts of interest and very difficult for highly qualified and motivated strategic and financial buyers to access much-needed diligence information.
And credibility is about the right word. Yahoo’s not so serious stand on the topic of something as serious as a sell out has been criticized multiple times over the course of the past few weeks.
The company however, just today, actually confirmed Smith’s proposition, by official releasing a statement which says,
The Board’s Nominating and Governance Committee will review Starboard’s proposed director nominees and respond in due course.
Well, that pretty much gives out all left over hints.
And now we have Microsoft into the mix too — Ironically enough, the entry of the software giant actually serves to strengthen the Yahoo boards claims about being serious with regards to selling the company. After all, neither do i think that Microsoft would take kindly to being played around with, nor that Yahoo would be foolish enough to piss off one of the biggest corporations in the world with its antics at such a time.
Why is Microsoft suddenly so interested, you may ask? Well, first of all, the interest is not sudden. Microsoft attempted and failed to buy Yahoo back in 2008 and err…the failed deal wasn’t exactly of the kind where everyone walks off with no bad feelings. So there was a degree of animosity, at least for a period, between M and Y.
Secondly, both the companies have since then established a healthy-ish, working relationship. Both the companies now have various search and advertising related ties.
Which is something Microsoft wouldn’t like disturbed. The company is quite keen to maintain the status quo so that regardless of who buys Yahoo, Microsoft and its services aren’t put to any inconvenience. And what better way to achieve it than by putting in, say a billion, into a deal meant to buy Yahoo.
And believe it or not, a billion is going to be very important. Yahoo’s heydays are far behind and the company can hope to gain a maximum of a few Billion out of any deal — leaving out its Asian assets, such as its stake in Alibaba, which may be spun off as a separate entity.
Most realistic offers put the value of Yahoo’s core business around $5-7 Billion — Although, the board was said to be deluding itself with hopes of $10 Billion and above. That said, if Microsoft can help a friendlier firm A, buy out Yahoo over another not so friendly firm B, by chipping in a billion — Good investment, no?
Corporate circles certainly move in mysterious ways, and its up to us to lay them out for you. Meanwhile, Yahoo’s fate seems to be pretty much sealed — unless of course, the Merissa Meyer sect manages to pull off a veritable miracle of some sort — launches a Y-pod or something! — an event which seems to be becoming more unlikely by the day.
Let’s see how things turn out between Microsoft and Yahoo and the private equity firms. Stay tuned!
[UPDATE : 1]
Microsoft, in an emailed statement to The Tech Portal, has declined to comment on the matter, at this point of time.
[UPDATE : 2]
Yahoo too, in an emailed statement to The Tech portal, has declined to comment on the matter, at this point of time.