Shares of Yahoo! (YHOO) are up 13 cents, or 1%, at $14.09 this morning after Stifel Nicolaus’s Jordan Rohan raised his rating on the stock to Buy from Hold, with an $18 price target, arguing the chances have increased for a buyout of the company.
“The likelihood of a buyout has increased to 80%, in our view,” writes Rohan, given the diminished profit picture. He recently cut his estimate for the company’s 2012 Ebitda to $1.54 billion from $1.7 billion.
“At some level, bad means good (for YHOO shareholders), as faltering fundamentals weaken the case that Yahoo should remain independent.” Put another way, the weakening fundamentals have “prioritized the outright sale of the company.”
Rohan expects Microsoft (MSFT) could play in any private equity deal that might happen, given its search advertising interests are tied up with Yahoo!
The value of Yahoo!’s stake in China’s Alibaba Group is probably $10 per share, though it’s possible someone could value it higher. He sees a bid for Yahoo! of as much as $22 being possible.
And on that note, I would observe that my friend Eric Savitz at Forbes this morning confirms through an independent source what Kara Swisher of AllThingsD first reported this morning, namely that private equity firms Silver Lake and Russia’s DST Global are leading a $1.6 billion tender offer for a roughly 5% stake in Alibaba, valuing the company at $32 billion.
Kara notes Silver Lake and DST are cooperating with something called Yunfeng Capital, which is a China-based private equity firm founded by Alibaba’s Chairman and CEO Jack Ma.
Eric notes in his article that would increase Yahoo!’s 39% ownership stake in the company to $12.48 billion , leaving aside liquidity and tax issues.
Update: DST and Silver Lake issued a formal press release confirming they are committing to making an investment in Alibaba, without disclosing any amounts, “in part” through a tender to employees and options holders and “certain other shareholders.” As Kara wrote, Yunfeng will take part. The tender will commence today and is expected to close in six weeks’ time.
Silver Lake’s head of Asia operations, Kan Hao, is quoted in the release as saying, “Alibaba is a technology company of profound importance and growth potential. We have developed a strong relationship with Alibaba��s management over several years, and this commitment reflects our confidence in the company��s leadership position and the growth of the e-commerce market in China.��
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