Alibaba, one of China’s largest e-commerce companies (of which Yahoo! owns 40%), has expressed interest. Alibaba’s CEO, Jack Ma, said he thinks a transaction would be attractive, but the Committee on Foreign Investment in the United States might block the Chinese ownership of a large American internet company. Alibaba does not appear to be bothered by this, considering it has approached Tamesak. What would Singapore’s sovereign fund see in Yahoo!? Obviously a substantial benefit in a Alibaba deal. The fact that a fund from around the world would consider helping Alibaba outbid U.S. financial firms is extraordinary. It shows a level of faith in Ma that U.S. analysts — who consider his offer a bluff to get Yahoo! to sell its stake in Alibaba back to him — do not have.
Jerry Yang is another unexpected bidder. He does have an inside track as one of the company’s founders. He and cofounder David Filo own about a third of Yahoo!’s shares, which would make a transaction less expensive. Yang was fired as CEO two years ago. He may want that job back. He also may see value as a board member that Wall St. analysts — who do not expect the company to grow — do not see.
The more improbable the buyers, the more likely there is some value in Yahoo! that is not unlocked. Private equity firms are experts at finding hidden value, if a company has value beyond its share price. But their offers may come after buyers who were not in the game just a few weeks ago, and for various reasons were not expected to be at all.
Douglas A. McIntyre
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