Tuesday, April 12, 2016

Another Enters the Ring:YAHOO!

Another Challenger Enters…
The Daily Mail has thrown its hat in the ring in the continuing bidding war for Yahoo. The company is apparently in multiple talks with private-equity companies about backing the bid, according to a report by the WSJ. Daily Mail joins nearly 40 companies, with brand names including, Verizon, Microsoft, Google, Time Inc, and CBS who have already or are planning to submit bids for Yahoo’s core business.  Opinions on the value of the Yahoo’s core business have been extremely volatile ranging from $8 billion to some giving the company’s core internet business a value of less than $0, considering its market cap is $34 billion which is roughly the value of its stake in its Asian holdings (Alibaba, Yahoo Japan).
What is for Sale?
Yahoo’s business that’s up for sale can be categorized into 3 categories, its Asian holdings, its’ Display and Video Ad Formats, and its Search engine.
Yahoo’s Asian assets includes its 15.4% in Alibaba Group, which is worth around $30 billion, and its 35% stake in Yahoo Japan, which fairs a lot better than its American counterpart.
Yahoo’s Display and Video Ad Formats on Yahoo’s Display network partners. Ad sales includes Yahoo homepage, sports, finance, mail, as well as the blogging site Tumblr which Yahoo purchased for $1 billion in 2013.
Yahoo’s search engine has generated around 40% of the companies’ revenues and according to a Re/ code report, Yahoo is telling potential buyers that it expects to see its revenue drop another 15% this year.
Why Daily Mail Why Yahoo?
Yahoo might be the purchase entry way for the UK based Media Company. Having debuted a U.S. version of the Daily Mail in 2012 the company has reached 66.7 unique visitors and is looking at the U.S. as a significant growth driver, and Yahoo can definitely contribute to Daily Mail’s global expansion.
The Daily Mail can also use Yahoo Finance to fill the business section, and with the popularity of Yahoo Finance among millennials it can integrate seamlessly with Elite Daily (Daily Mail’s millennial centric media website).
Final Thoughts
It is interesting to see what Daily Mail might have in store for Yahoo, but it seem that the final bidding war would be between Verizon and the Daily Mail, as both sides seem to benefit the most from the purchase of Yahoo’s business, but if Yahoo does not sell itself soon, it can begin another nasty battle with activist hedge fund Starboard value, in the upcoming shareholder’s meeting coming up this spring.

No comments:

Post a Comment