Former AOL CEO Jon Miller is trying to raise money to buy Yahoo, says the WSJ. A great idea at this price, but probably tough to raise the money for a full buyout at the $20-$22 mentioned below. There’s another option, though…
WSJ: Mr. Miller has been talking to private equity investors and sovereign wealth funds for months in hopes of raising money for a Yahoo deal, and it is unclear whether the talks have progressed or are just continuing, these people say. Mr. Miller believes he can do a deal that would be worth around $20 to $22 a share to Yahoo shareholders, these people say, which would involve raising about $28 billion to $30 billion to purchase the entire company.
Sources close to Yahoo expressed deep scepticism that Mr. Miller would succeed in lining up investors.
Indeed, given banks’ reluctance to lend money right now, financing a deal of this size would be extremely difficult, even from deep-pocketed sovereign wealth funds. An investment in Yahoo would also be extremely risky in the current advertising market and amid the company’s ongoing search for a new chief executive. Sovereign investors have lost money on many large investments in the past year and may be reluctant to make a bet on a company with Yahoo’s challenges.
It is unclear whether Microsoft Corp., which has indicated that it is still open to doing some sort of deal with Yahoo, would be involved in any transaction.
Mr. Miller has discussed the idea with some Yahoo board members, these people say, but the matter hasn’t come up for an official board discussion.
The $20-$22 share offer is probably too high for Jon to be able to raise the financing. There is a deal to be done here, though. If Jon wants to take a run at the company, all he really needs to do is convince Carl Icahn, Gordy Crawford, Bill Miller, and a bunch of other Yahoo holders that he’s the guy to run it.
*UPDATE: Some are suggesting that Jon Miller is just trying to raise a fund for Velocity and that the WSJ’s Jessica Vascellaro got the story wrong. Our guess is that the truth is somewhere in the middle: Jon is exploring the idea of raising money to buy Yahoo, which would be another way of saying he is “trying” to raise money to buy Yahoo. Either way, the money’s not going to be easy to raise. Which is why we think getting himself appointed CEO and buying a bunch of the stock would be a cheaper and easier route.