December 2nd, 2008
Yahoo: Going private trial balloon floated; Is private equity the solution?
Former AOL Chief Jonathan Miller is looking in the couch cushions to raise enough money to buy a part–if not all of Yahoo.
According to the Wall Street Journal, Miller has been talking to private equity folks and sovereign wealth funds to buy Yahoo for about $20 to $22 a share. Miller would have to raise about $28 billion to $30 billion.
This report has trial balloon written all over it. And the Journal notes that Miller would have trouble raising the dough.
However, going private would probably be a good idea. Yahoo could restructure, revamp and not worry about making quarters. Seagate went private in the last bust and them returned after restructuring.
There are a number of questions hanging around:
- Would Microsoft fund Miller?
- What sovereign wealth funds would be interested? Yahoo-Dubai-dot-com?
- Is Miller floating this story to actually raise the dough?
- Could Yahoo refuse a bid if it got one?
- What would Yahoo the private media company be able to do that the public one can’t?
That final question is the big one for me. The private equity playbook looks like this: Buy a company, lever it up with debt and pay shareholders big dividends. Exhibit A: Chrysler. Exhibit B: Linens & Things. Exhibit C: Sharper Image. Exhibit D: Tribune. Not to tar all private equity, but the recent track record isn’t great. Would Yahoo be acquired by visionaries or folks who want to strip it?
Also see: Icahn averages down on Yahoo; Searches for break even
Yahoo: Pondering Yang’s replacement; The next move
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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