Yahoo may buy back shares, pay dividend

NEW YORK/SAN FRANCISCO: Yahoo! Inc. is leaning toward selling its Asian assets and redistributing the proceeds to shareholders, rather than selling itself to a group of buyers, according to five people familiar with the situation.

This scenario is emerging as the most likely option for Yahoo and would let the company eventually pay a special dividend or buy back shares, said the people, who declined to be identified because the talks are private. The stock has surged 28 per cent since the company fired Chief Executive Officer Carol Bartz in early September, making it a more expensive target for private-equity buyers, the people said.

Yahoo has been exploring options while searching for a replacement for Bartz, who struggled to boost revenue growth or fend off competition from Google Inc. and Facebook Inc. Co- founder Jerry Yang said on Oct. 20 that the company isn't necessarily on the block.

“The intent going in is not to put ourselves up for sale,” Yang said that day at the All Things Digital Asia conference in Hong Kong.

“The intent is to look at all options. There's plenty of options for the board, and plenty of options for our shareholders to realize value.”

No decision has been made yet and Yahoo could still sell to a group of investors, the people said. Yahoo may also sell a minority stake in the company, or seek a buyer for the entire company after finding buyers for Asian assets, said the people. A change of ownership entirely would put the taxefficiency of the Asian asset deals at risk, one of the people said.

Dana Lengkeek, a spokeswoman for Sunnyvale, California- based Yahoo, declined to comment.

“Multiple parties” have expressed interest in Yahoo, according to a September memo by Yang.

KKR & Co. and Blackstone Group LP are among the private-equity firms considering possible bids for Yahoo, people with knowledge of the matter have said.

In addition, Alibaba Group Holding Ltd., whose biggest shareholder is Yahoo, has discussed a plan with private equity firm Silver Lake and Russia's Digital Sky Technologies to make a joint bid, people familiar with the matter have said. Another group that is interested includes Providence Equity Partners Inc.

and former News Corp. executive Peter Chernin, people said. The sheer number of parties that have mulled offers for Yahoo is contributing to the difficulty in reaching an agreement, the people said.

Amassing the financing needed to acquire a $20.9 billion company is another hurdle, the people said.