Private equity’s Yahoo interest

Oct 14, 2011

Dan Primack was a senior editor at Fortune from 2010 to 2016. He was also the author of Term Sheet, Fortune's daily newsletter about deals and dealmakers.

Will Yahoo be taken private?

Yahoo (yhoo) still doesn't have a CEO, but it does seem to have a lot of private equity interest. Reports this week suggest that both The Blackstone Group (bx) and Kohlberg Kravis Roberts & Co. (kkr) are sniffing around the digital media company, which already has received some interest from Silver Lake Partners (in coordination with DST Group and Alibaba Group).

So I spoke to someone familiar with the situation who provided two basic messages:

  1. 1. This would be a very complicated deal, due to Yahoo's existing relationships with Alibaba and Yahoo Japan. Moreover, it would be the largest agreed-upon LBO since before the financial crisis. So any deal would be a long ways off.
  2. 2. "Every single private equity firm with a fund greater than $5 billion is at least taking a look." In other words, of course Silver Lake, Blackstone and KKR are kicking the tires. And TPG, Apollo, Bain, TH Lee, etc. probably are as well.

That said, I'd be very surprised if a deal got struck that included Blackstone. Tech is the one sector that Blackstone has tended to generally avoid, and it doesn't have any consumer Internet companies in its portfolio. The closest comp I see might be The Weather Channel, which is a media company with a serious online presence (albeit a company with a more obvious sense of mission/focus than does Yahoo).

In fact, someone recently suggested to me that Blackstone's next major expansion move should be to acquire Silver Lake (not that it's for sale, or that BX is actually interested in massive tech platform expansion). Again, I'm sure Blackstone has nominal interest. But it's a real longshot to get involved and, if I'm wrong, it would likely be the moneyman behind a more experienced Internet investor...

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