30 Nov, 2011
Yahoo is weighing an offer from its Asian allies, the Chinese ecommerce company Alibaba and Yahoo Japan, that would involve it selling back its stakes in those companies, according to people familiar with the situation.
The decision to consider the proposal, which was first presented in October, comes as the embattled US internet company is pursuing a parallel plan to sell a large minority stake to an outside investor, and could represent a breakthrough in Yahoo's attempts to resolve the questions about its future.
Yahoo has already received at least two proposals from private equity investors interested in taking a 20 per cent stake in the company, and is expected to receive one or two more this week, said people familiar with the matter.
The parallel initiatives are expected to be presented at a regularly scheduled board meeting of the internet company on Wednesday. The discussions about Yahoo's various options have entered a "new phase", according to one person familiar with the process, with Yahoo pressing to reach an early resolution, although no hard deadline has been set.
News of the talks over Yahoo's Asian stakes follows protracted pressure from Jack Ma, head of Alibaba, to persuade the US company to part with its 42 per cent stake in the Chinese company. Along with Softbank, Yahoo's partner in the Japanese venture, Alibaba has also held talks with private equity firms about making a full bid for the US company in order to unlock the Asian stakes, according to a person familiar with the situation.
Under the plan that Yahoo has is now considering, the US company Yahoo would dispose of its stakes in Yahoo Japan and Alibaba using a tax-efficient structure, known as a cash-rich split. While it is discussing such a proposal with both Asian companies, one person familiar with the matter suggested that the parties need not proceed jointly, with discussions around the Japanese stake seen as further advanced.
The complex interlocking shareholdings between the companies and the need to come up with a tax-efficient structure for any deal still makes it hard to come up with a quick solution, one person close to the process warned. "It's not the kind of thing you can do on the back of an envelope," this person said.
Meanwhile, Yahoo has been discussing selling a large minority stake with private equity firm Silver Lake, which has teamed up with Microsoft, and TPG. Other groups are currently working on whether to submit an indication of interest, with KKR and Providence among those cited by some people familiar with the situation as doing serious work on a proposal.
Other groups, including Blackstone, are considering their options around Yahoo but have not yet signed the confidentiality agreement required by the company in the bidding process.
The strategic review, which aims to bolster the company's core internet properties with new cash from an outside investor, is happening in tandem with the consideration of the proposals from the Asian companies.More News From Financial Times
Trading Automation Is 'Strangling' Small Caps