KKR, Blackstone Said to Weigh Yahoo Takeover
KKR & Co. and Blackstone Group LP (BX) are among the private-equity firms considering possible bids for Yahoo! Inc., according to people with knowledge of the matter. — The firms may become part of a consortium that would pool the financing needed …
Context & Ripple Effects
Bloomberg reports, citing people with knowledge of the matter, that KKR & Co. and Blackstone Group LP are among the private-equity firms weighing possible bids for Yahoo, potentially banding together in a consortium that pools the financing a deal of this size would require. Both firms' interest is unconfirmed — sourced talk, not a filed bid.
The consortium framing has a direct precedent in these firms' recent history: KKR was reported back in April 2009 to have joined forces with Warburg Pincus, Providence and Elevation on a leveraged buyout approach for Skype, a template of several large sponsors sharing one mega-deal rather than any single firm writing the whole check.
First-order effects
- Yahoo's board now has reported financial-sponsor interest to weigh alongside any strategic approaches, giving it an outside valuation benchmark as it decides how to respond; KKR and Blackstone, for their part, face the immediate work of recruiting consortium partners and arranging debt before anything binding emerges.
Second-order effects
- Advisory banks and mid-sized sponsors will jockey for seats in whatever consortium forms, because a company of Yahoo's scale almost certainly exceeds what either KKR or Blackstone would finance alone — and each additional firm added changes who controls the bid and how aggressive it can be.
Third-order effects
- If sponsor interest proves durable, large internet assets start getting priced by financial buyers as well as strategics, pushing target boards toward formal auctions that test private-equity appetite before committing to a single acquirer.
The trend: Large-cap technology buyouts are returning through multi-firm private-equity consortia that pool financing, reviving the shared-check structure these same sponsors used around Skype in 2009.