We believe Yahoo (YHOO) management is not interested in selling the company, but the Post rightly observes that, at this price, a potential buyer might make an offer Yahoo can’t refuse (fiduciary duty to shareholders, etc.)
The Post reports that private equity firms in particular have been sniffing around in recent days, and suggests that strategic buyers who have looked at Yahoo in the past–AOL, AT&T, CBS, Comcast, Microsoft, Viacom and News Corp–might decide to have another go.
Of these buyers, Microsoft and AOL still make by far the most strategic sense, but a Microsoft deal would likely destroy the company. (See the litany of reasons here). An AOL combination would be smart (see below), but the buyer should be Yahoo, not AOL, and this deal gets less and less likely as Yahoo’s stock drops.
So the most likely buyer here is probably private equity. And it’s not hard to guess what a big PE buyer would likely do: Go private, lever up, pay a huge one-time cash dividend, fire a couple thousand people, sell off everything but the core business, and go public again.
Inasmuch as that particular turnaround plan would benefit the private equity buyer, not us, we’d rather stick with Jerry, David, and Sue. So we’re glad they appear to be getting more aggressive about their own turnaround plan.
The Web War is Over and Microsoft Lost:
MSN: Still Sucking Wind After All These Years
Disclosure: Henry Blodget has long-term positions in Yahoo, Time Warner, and Microsoft
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