Yahoo! shares! leap! on! asset! sale! gossip!
Plan to flog Alibaba and Yahoo! Japan stakes pleases investors
Shares in Yahoo! got a bump yesterday on rumours that the company is considering getting rid of most of its Alibaba stake and all its stake in Yahoo! Japan.
Those folks familiar with the matter told Reuters that the ailing web firm could offload the Asian assets in a deal worth around $17bn, a step in the right direction as far as investors were concerned.
The shares climbed 5.82 per cent in yesterday's trading to $15.99, and had risen 3.19 per cent in pre-market trading today as of 10am GMT.
The Asian assets idea is the latest in a string of possible moves Yahoo! has talked about in an effort to revive its flagging fortunes.
There have been strong rumours that the firm could sell off part or all of itself to private equity investors. The idea of PE firms bagging a minority stake, leaving the same status quo at the top, was not a popular one with shareholders, particularly activist hedge fund manager Dan Loeb from Third Point.
Both China's Alibaba and Japan's Softbank, owner of the rest of Yahoo! Japan, have also been reported as interested in buying up some or all of the US side of the firm.
Alibaba chief Jack Ma has made no secret of the fact that a lot of his interest in buying Yahoo! stems from his desire to claw back the bit of Alibaba the US company has, so a deal to transfer back some of the 40 per cent of the Chinese firm would no doubt please him.
Although the deal would leave Yahoo! still holding a 15 per cent stake in Alibaba, according to the sources.
Bagging a few billion to sort itself out seems like a good idea, but the company would still have to come up with a plan to make its US business profitable, and most market watchers aren't putting too high a value on that side of Yahoo!
If the Asian asset deal is indeed worth $17bn, it puts the value of Yahoo!'s US business at a pretty paltry sum, considering the market capitalisation of the entire firm is around $19bn, which isn't a great vote of confidence on the management's ability to turn the US unit around. ®