Bids for Yahoo! Inc. (YHOO) Expected to Be Billions Below Original Expectations

Shares of Yahoo! Inc. (YHOO) were trading down -1.89 or -5.11 percent to $35.13 per share in Friday’s premarket after news broke late yesterday that bids for the company and/or its assets will be billions of dollars below its original expectations. Yahoo! Inc. stock closed at $37.02 per share, down -0.22 or -0.59 percent in Thursday’s regular trading session.

Founded by David Filo and Jerry Yang in 1994, Sunnyvale, California based Yahoo! Inc. is a global Internet corporation best known for its web portal and search engine.
The company also provides a variety of other Internet services including Yahoo Mail, Yahoo News, Yahoo Finance, advertising, video sharing and social media, to name only a few. According to web analysts, Yahoo websites are visited by 700 million people per month with as many as 7 billion readers on their news and media websites which are in more than 30 languages.

Yahoo! planned to spin off its considerable stake in Chinese e-commerce giant Alibaba Group in January of 2015. Nevertheless, Yahoo back tracked on the decision deciding on spinning off the company’s core assets, which was opposed by investor Starboard Value and other shareholders in favor of a sale of the company.

According to a report released late yesterday citing people “familiar with the matter”, bids for Yahoo’s core Internet business will probably not be as high as previously forecast. The confidential auction for Yahoo assets had its first deadline last month, with analysts expecting bids of $4 billion to $8 billion for the company’s core Internet business including advertising and business search sites, Yahoo Sports and Tumblr.

The report said that bidders, including major player Verizon (VZ), had lowered their bids after seeing weeks of presentations by Yahoo! and Chief Executive Officer Marissa Meyer, as well as reviewing the company’s outlook. A second round of bids has a deadline in the first week of June and it is unclear whether another bidding round will follow.

In addition to lead player Verizon, Berkshire Hathaway’s (BRK-A) Warren Buffet is reportedly backing a consortium of investors including NBA team owner and Quicken Loans founder Dan Gilbert to acquire the company. Other potential bidders include KKR, TPG Capital and a pairing of Vista Equity Partners and Bain Capital. The Daily Mail has also reportedly joined with private equity firms.

The first round of bids had a number of potential buyers drop out. Companies which opted against submitting a bid in the first round of bidding  included Japanese company Softbank, Google parent company Alphabet (GOOG) and Time Inc. (TIME).

Yahoo stock has recovered significantly since trading below $27 per share in early February of this year. This morning’s performance has seen the stock recover somewhat despite the news of lower bids for the company’s key assets. Nevertheless, other interested parties may make bids before the June deadline, which could push the stock higher.

Other News About YHOO

What's the Mystery Surrounding a Bid for Yahoo?

Video interview with Citigroup M&A.analyst on the bidding process for Yahoo.

Warren Buffett partnering with Quicken Loans founder to bid for Yahoo: Report

News of Buffet’s interest in partnering with Gilbert surfaced last week.

Other Stocks in the News

Samsung strikes mobile payment deal with Alibaba

Samsung’s mobile payment system will work with Alibaba’s Alipay.

Top Bayer investor says 'furious' at company over Monsanto bid

John Bennett of Henderson Global Investors expressed his dismay over the “immediate destruction” of shareholder value after the bid was announced.

Published on May 20, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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