See Also:
OUTRAGEOUS! The Yahoo Board Is Demanding That It Be Able To Pick The Next CEO
Alibaba Wanted To Buy Hulu And Trade It To Yahoo For Yahoo’s Stake In Alibaba
ANDREESSEN: The Rumors Are Wrong, I Am Not Going To Run Yahoo
Last week, it was reported that Yahoo’s board was “leaning toward” accepting the proposal by private-equity firm Silver Lake to take a minority stake in the company.
As I’ve described, this proposal would come with many follow-on steps, including a reconstitution of Yahoo’s Board of Directors, a share buyback or dividend, the hiring of a new CEO, a “solution” for the Asian assets (read: monetization of some sort), and the re-focusing of the company’s core business.
Another theory that some Yahoo observers are still advancing, however, is that Alibaba is finally going to come forward with the offer for the whole company that has been murmured about for the past three months. One investor I spoke to last week, in fact, thought that the whole “leaning toward the Silver Lake deal” report was just a plant to get Alibaba to finally produce its offer.
Well, I’m very skeptical that Alibaba is ever going to make such an offer given the cash and regulatory hurdles involved. And with every day that goes by, this phantom offer seems less and less likely.
But then this week I heard another new theory from some Yahoo investors, which is as follows:
The new transaction Yahoo is “leaning toward,” two investors assured me, is not the Silver Lake deal or a sale of the company but a “cash-rich split” of Yahoo’s Asian assets with Alibaba and Softbank, with funding provided by private-equity firms Bain and Blackstone.
As part of this deal, two people who espouse the theory told me, Bain and Blackstone will sell The Weather Channel to Alibaba and then Alibaba will swap The Weather Channel and a boatload of cash with Yahoo in the cash-rich split in exchange for Yahoo’s Asian assets.
The Weather Channel?
Yes, The Weather Channel.
You see, in a cash-rich split, the “buyer” of the assets that will be traded can’t pay all cash. At least one-third of the rumuneration has to be in the form of operating businesses. So, to buy back the stake in itself that Yahoo owns, Alibaba would have to deliver about $10 billion of cash to Yahoo plus some operating assets. And since Alibaba doesn’t have any assets that it wants to part with that Yahoo would want, the idea is that Blackstone will sell Alibaba the Weather Channel and Alibaba will swap the Weather Channel with Yahoo.
Why the Weather Channel?
Because the Weather Channel is the only big thing that Bain and Blackstone own that anyone can imagine that Yahoo might want to own.
(And, hey, Yahoo has a “weather” section. So of course they’d want to own a cable network. Right?)
Well, anyway, I ran the Weather Channel theory by a person familiar with Yahoo’s options.
The person laughed out loud.
So I, for one, am not putting a lot of stock in the Weather Channel theory.
But maybe Bain and Blackstone and Alibaba can find something else to swap with Yahoo for those Asian assets. Lord knows they have plenty of cash.
And maybe Alibaba will still come forward with that long-rumored bid for the company.
And if they don’t, well, there’s always the Silver Lake deal.
SEE ALSO: Okay, Now I Understand The Silver Lake Deal For Yahoo, And It’s Actually Not That Bad
DISCLOSURE: I work for Yahoo, as a host of Yahoo Finance’s DailyTicker. I am a Yahoo shareholder (since 1998–oof). I know tons of people at Yahoo and on Yahoo’s board. I know lots of Yahoo investors, many of whom I like personally. I know Marc Andreessen, Reid Hoffman, and many of the other players in this drama, and I like them personally. Marc’s an investor in Business Insider, which I greatly appreciate. Yahoo and Business Insider have a syndication partnership, which I am thrilled about. Yahoo’s bankers, Allen Co, are investors in Business Insider, and I like them personally and don’t like to do things that make them mad at me. I have relationships with dozens of other folks that might create conflicts of one sort or another when I write about this topic. So, basically, I’m conflicted out the wazoo.
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