Google, Private-Equity Firms Mull Bid For Yahoo
Google Inc. has talked to at least two private-equity firms about potentially helping them finance a deal to buy Yahoo Inc.'s core business, according to a person familiar with the matter. — Google and prospective partners …
Context & Ripple Effects
Yahoo's strategic review is accelerating into a financing contest. On October 13, KKR and Blackstone were reported weighing a takeover of Yahoo, and two days ago Jerry Yang told AsiaD the board's options extend beyond a sale. Now Google is said — unconfirmed, per people familiar — to have talked with at least two private-equity firms about helping finance a bid for Yahoo's core business.
It would be Google's second reach toward Yahoo: the company made an approach back in February 2008. Same-day reporting via WSJ's Deal Journal adds a twist — Microsoft is firming up plans to bankroll a possible rival Yahoo deal, meaning the two search rivals could end up on opposite sides of the same auction.
First-order effects
- Yahoo's board review now has a named strategic-financial bidder combination on the table: a Google-financed consortium would give Google influence over its largest display-advertising rival's core assets without an outright acquisition.
- For KKR and Blackstone, the deal structure shifts from a standalone leveraged buyout toward consortium formats where a strategic partner supplies part of the capital.
Second-order effects
- Microsoft's reported plan to bankroll a competing bid turns Yahoo's auction into a financing duel between the two dominant search platforms, raising the price any private-equity buyer can command.
- Other strategics weighing Yahoo pieces must now decide whether to partner with financial sponsors or risk losing the asset to a Google- or Microsoft-backed structure.
Third-order effects
- If strategics increasingly act as financiers rather than acquirers for distressed web-media assets, regulators face harder-to-challenge structures than the outright mergers that drew scrutiny in past big-tech/media combinations.
- The pattern points toward portal-era businesses being valued and restructured as private-equity turnaround targets, with their strategic value priced through auction competition among tech platforms.
The trend: Distressed web-media assets are drawing hybrid bids in which strategic technology companies supply financing to private equity instead of acquiring outright, reshaping who controls legacy internet advertising inventory.