The Strategist

Warren Buffett enters into competition for Yahoo!

05/16/2016 - 15:13

According to Reuters’ informed sources, American entrepreneur and billionaire Warren Buffett's company Berkshire Hathaway will apply to purchase online assets of Yahoo! Buffets wants to incorporate the media company in his consortium. According to sources, Mr. Buffett is willing to provide financing to investors, if Yahoo! assets transaction is held.

Stuart Isett/Fortune Most Powerful Women via flickr
Stuart Isett/Fortune Most Powerful Women via flickr
Citing informed sources, Reuters agency reported that billionaire and head of Berkshire Hathaway Warren Buffett has expressed interest in the auction for purchase of Yahoo! internet assets to be included in the consortium. The consortium, among others, involves Quicken Loans mortgage company by American billionaire Dan Gilbert. The latter also owns the National Basketball Association club "Cleveland Cavaliers" and a club of the American Hockey League "Erie Monsters." According to Financial Times, Warren Buffett and Dan Gilbert have been friends for several years and together signed a letter airing their interest in Yahoo! assets. However, no formal conditions have not been specified yet. At that, Reuters’ sources note that Buffett is allegedly ready to provide investors with necessary financing to complete the transaction through Berkshire Hathaway.

It is reported that the process of selling of online assets Yahoo! entered into the second stage. The company's advisers are now in talks with the most likely buyers. Recall that Yahoo! announced plans to sell a number of assets in mid-February, having issued disappointing quarterly results once again. Already for several years, the company has been struggling get out of a deep crisis triggered by constantly falling audience and advertising revenues. Shares of Yahoo! in November 2014 fell by 42%. Some applicants for the purchase emerged soon after the announcement of the possible assets sale. Among them showed up: Verizon Communications, Google, Time, private investment funds Bain Capital, Apollo and TPG, publishing company YP Holdings. The favorite, according to analysts, is telecommunications giant Verizon Communications. In case of a successful transaction, it will combine Yahoo! assets with AOL division, acquired for $ 4.4 billion last year.

Alphabet’s Internet division – Google - appeared among those wishing to buy Internet company Yahoo!. Some experts expressed doubts that such a deal is feasible, as Google manages the largest search engine and popular Internet services. Thus, the acquisition would be be subjected to stringent inspections by regulators and competition authorities.

In February, CEO of Verizon American telecommunications company also said that his company may qualify to buy Yahoo! He said that the combination of Verizon's AOL with assets belonging to Yahoo! would be "perfect for investors".

Yahoo! is selling a number of non-core assets in order to concentrate on three main areas: mail service, online search and Tumblr. The company does not want to give up on Tumblr, despite the fact that it did not live up to its owners’ expectations. The Strategic Plan also implies separation of stake in Alibaba Group Holding, and shares in Yahoo! Japan. According to Bloomberg’s estimates, value of Yahoo! stake in Alibaba is around $ 32.6 billion, and that in Yahoo! Japan - $ 8,7 billion.