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Companies Reportedly Eyeing Yahoo Buy

October 6, 2011

China´s Alibaba, Russia´s Digital Sky Technologies (DST) and private-equity firm Silver Lake may be partnering to make a bid for Yahoo, according to several media reports.

News Corp. might also be weighing a bid for the Sunnyvale, Calif.-based company, The New York Times reported on Monday.

Microsoft Corp., which performs search functions for Yahoo through a partnership arrangement, is also reportedly a prospective bidder.

Yahoo reopened its door to an acquisition and has been fielding potential bids after ousting chief executive Carol Bartz on Labor Day, and has hired Allen & Co. for strategic advice, the Times reported.

However, any potential foreign acquisition of Yahoo would likely draw intense scrutiny from U.S. regulators.

DST´s interest in Yahoo, first reported by Bloomberg News, would not be surprising given its announcement last month that it was partnering with Silver Lake to tender for shares of Alibaba, valuing the company at $32 billion, according to International Business Times. That would place the value of Yahoo’s 40 percent stake in Alibaba at approximately $12.8 billion.

According to Bloomberg, Silver Lake, Alibaba and DST have contacted Yahoo and its advisers in recent weeks to discuss a potential bid, although the preliminary talks offer no guarantee that an offer will emerge.

Digital Sky, run by Russian tycoon Yuli Milner, is a significant investor in several American companies, including Facebook, Zynga and Groupon, and also has close ties to Goldman Sachs.

Alibaba chief executive Jack Ma told a forum at Stanford University last week that he would be interested in a Yahoo acquisition.

But any acquisition of Yahoo by Silver Lake, Alibaba and DST would mean Chinese and Russian companies would control the most visited U.S. web portal and second-largest search service.  Indeed, the three firms are already preparing for opposition to foreign ownership of a communications company, Bloomberg  reported.

Opposition by U.S. lawmakers had previously caused China-based Huawei Technologies to abandon its 2008 bid to acquire 3Com, which was later bought by Hewlett-Packard in 2009 for $2.7 billion.

Meanwhile, News Corp. has reportedly contacted Yahoo and several financial firms, including Silver Lake, about a possible bid for the company, the New York Times reported.

Yahoo’s market capitalization is currently around $17 billion, while its enterprise value is $14.6 billion.

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Source: RedOrbit Staff & Wire Reports



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