Posted tagged ‘Velocity Interactive Group’

Former AOL Chief Executive Looking to Buy Yahoo?

December 3, 2008

According to reports, former AOL chief executive Jonathan Miller is talking to investors about raising money to purchase all or part of Yahoo.

From the Wall Street Journal:

Miller, who ran AOL from 2002 to 2006, has been sounding out private-equity investors and sovereign-wealth funds for months, and it is unclear where the talks stand, these people say.

Mr. Miller believes he can fashion a deal that would be worth about $20 to $22 a share to Yahoo shareholders, these people say, which would involve raising about $28 billion to $30 billion to purchase the entire company.

Some large Yahoo shareholders and board members were not aware of the talks Tuesday, suggesting Mr. Miller’s discussions are informal. Mr. Miller did not respond to requests for comment, and a spokeswoman for his investment firm declined to comment. A Yahoo spokesman declined comment.

Other people close to Yahoo expressed skepticism that Mr. Miller would succeed in lining up investors. Given banks’ reluctance to lend money right now, financing a deal of this size would be extremely difficult, even from deep-pocketed sovereign-wealth funds.

An investment in Yahoo would also be risky amid the current slump in advertising and during the company’s search for a new chief executive. Sovereign investors have lost money on many large investments in the past year and may be reluctant to make a bet on a company with Yahoo’s challenges.

It is unclear whether Microsoft Corp., which has indicated it is still open to doing a search deal with Yahoo, would be involved. A Microsoft spokesman declined to comment.

From CNN Money:

Yahoo’s fate is becoming more convoluted every day. Just two days after the Times of London reported that talks between Microsoft and Yahoo were back on, the the Wall Street Journal says former AOL chief executive Jonathan Miller is trying to raise money from private equity and sovereign wealth investors to buy the struggling Internet company.

Shares of Yahoo spiked 11% to $12.50 in mid-day trading on the news that Miller wants to raise between $28 billion to $30 billion to buy the company at $20-$22 a share.

Calls to Miller’s office were not returned.

Some are skeptical that Miller will be able to succeed. Wrote Standard & Poor’s Internet analyst Scott Kessler in a note, “We think YHOO is attractively valued, but that Miller would have difficulty raising this amount of capital, given the state of the global economy, of capital markets, and of YHOO itself.”

Miller has close ties with Yahoo and activist investor Carl Icahn. Miller was nominated to Yahoo’s board last August as part of a settlement which gave Icahn three seats. However, Miller withdrew because former employer Time Warner (which also owns Fortune) would not waive a non-compete clause. Miller, who runs venture firm Velocity Interactive Group, was a consultant to Microsoft and Yahoo during their negotiations earlier this year.