Sunday, July 22, 2012

YHOO: Street Enthusiastic About Rumored Asia Assets Deal

The Street today is contemplating yesterday afternoon’s article by DealBook�s Evelyn Rusli and Michael de la Merced that said Yahoo!�s (YHOO) board of directors is meeting today to review a proposal that the company sell off its assets in Asia in a deal valued at $17 billion.

CNBC this morning hosted a comment by Andrew Ross-Sorkin, who pointed out that the deal would value Yahoo!’s Asian assets at $14 per share, which would mean Yahoo!’s main, or “core,” business is trading for just $2 per share.

Ross-Sorkin says as well that private equity firms Silver Lake and Texas Pacific Group are “still circling” Yahoo!, considering a bid for some part or all of the company.

If the deal falls through, says Ross-Sorkin, its’ conceivable the Asian partners, Softbank and Alibaba Group Holding, might team up with private equity firms to make a bid for Yahoo!

JP Morgan’s Doug Anmuth, who has a Neutral rating on Yahoo! shares, writes that the deal could imply a price of $20 per share for Yahoo! in total.

“We view a high value tax-free swap as the best outcome short of an outright sale,” he adds, “though we would not rule out the potential for private equity to bid for YHOO�s operating assets alongside this transaction or at a future date.”

And Needham & Co.’s Laura Martin, who maintains a Buy rating on Yahoo! shares and a $19 price target, writes that the rumored deal would be “a great outcome for public shareholders.”

Yahoo! shares today are up 22 cents, or 1.4%, at $16.21.

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