* News Corp, AOL among companies approached - source
* Silver Lake considered potential tie ups - source
* Any deal depends on Yahoo selling Asian assets - source
* Yahoo shares up nearly 10 percent after hours
(Adds analysts comments, valuations of Asian assets)
By Jennifer Saba and Megan Davies
NEW YORK, Oct 13 Several private equity firms
have approached Internet and media companies including News
Corp (NWSA.O) and AOL Inc AOL.N to gauge their interest in
buying out Yahoo Inc YHOO.O, a source with knowledge of the
The news comes as Yahoo, the No.2 search engine in the
United States behind Google Inc (GOOG.O), struggles to revive
its revenue growth under the management of Chief Executive
Carol Bartz, and to rebuild its buzz among consumers amid
competition from social networking sites such as Facebook.
A potential deal would be contingent on Yahoo selling its
prized Asian assets, including a 40 percent stake in China's
Alibaba Group and 34.5 percent of Yahoo Japan (4689.T), the
source told Reuters on Wednesday on condition of anonymity
because discussions were not public.
Talks with News Corp and AOL began about two weeks ago and
intensified in recent days, but Yahoo had not yet been
approached as talks were still in their early stages, the
Yahoo shares, which finished Wednesday up nearly 6 percent,
gained another 9.5 percent to $16.71 in extended trading.
Shares in Alibaba.com and Yahoo Japan rose in Asia trading.
Speculation of private equity interest in Yahoo, which is
also struggling to stem an exodus of senior executives to
rivals, has surfaced sporadically in past months.
Silver Lake Partners [SILAK.UL] was among the firms in very
preliminary, recent discussions about acquisition scenarios, a
second source with knowledge of the matter said.
Blackstone (BX.N) had also been pitched the idea but was
not currently working on a Yahoo deal, a separate source said.
News Corp, AOL, and Yahoo declined comment.
Yahoo's plans for its Asian investments have sprung into
the investor spotlight since Yahoo Japan turned to arch-foe
Google for its Internet search technology. [ID:nN27117444]
Once dominant in search, Yahoo has been overshadowed by
Google's growth and its market value is now little more than a
tenth of its rival.
In Tokyo, Yahoo Japan gained 5.5 percent and Yahoo Japan's
top shareholder, Softbank Corp (9984.T), rose 2.9 percent.
Yahoo Japan has a market capitalization of about $20.5
billion, valuing Yahoo's stake at about $7 billion.
Shares in Alibaba.com 1688.HK edged up 0.3 percent in
Analysts value parent Alibaba Group, China's largest
e-commerce company, at between $15 billion to $25 billion,
meaning Yahoo's 40 percent stake is worth up to $10 billion.
By disposing of those assets -- which some of Yahoo's
investors favour -- would help drastically reduce Yahoo's
market value of almost $20 billion now, making a deal more
Analysts said disposing of Yahoo's Asian assets,
particularly its high-growth Chinese assets might be a problem.
"An Alibaba share sale is not easy to achieve. It is not a
small deal and obviously it would be hard to calculate the
valuation to the benefit of all parties," said Wallace Cheung,
an analyst with Credit Suisse in Hong Kong.
Of the three crown jewels of Alibaba Group, only
Alibaba.com is listed. The other two, Taobao, China's largest
e-commerce site with a consumer focus; and Alipay, China's
largest e-payment provider, are private with shifting business
Taobao has 75 percent of China's consumer e-commerce market
by transaction value while Alipay has 51 percent of China's
e-payment market, according to Analysys International.
Softbank, Japan's No. 3 mobile phone operator, also owns 33
percent of Alibaba Group. The heads of the two groups, Jack Ma
of Alibaba and Masayoshi Son of Softbank, work very closely,
and as one of their latest collaborations, Yahoo Japan and
Alibaba's e-commerce website Taobao in June launched online
platforms to cross sell into each others' markets.
WANTED: MORE BUZZ
AOL is keen on gaining scale and snagging content to
re-kindle growth. The Wall Street Journal cited people familiar
with the matter as saying private equity firms were exploring
the possibility of teaming up with AOL on a joint bid, which
could give AOL the content and online eyeballs it needs to
become a news and entertainment powerhouse.
Among various scenarios discussed, one involved Alibaba
Group buying back Yahoo's 40 percent stake in the Chinese firm
and Yahoo selling off assets to rival media and technology
companies, the newspaper reported.
Another could involve AOL combining its operations with
Yahoo in a reverse merger -- again after Yahoo sells its stake
in Alibaba, it said.
In China, two sources at Alibaba said they had not heard
about any buyout of Yahoo's stake. Analysts said that if the
talks are preliminary, Alibaba may not have been approached
Bloomberg reported that Yahoo is working with Goldman Sachs
to help defend possible takeover approaches, citing three
Whatever form it takes, any deal would likely be a far cry
from the $47.5 billion, or $33 a share, offer that Microsoft
(MSFT.O) made for Yahoo in 2008 and which was rebuffed by
Yahoo's co-founder and then-CEO Jerry Yang, analysts and
Ironfire Capital's Eric Jackson, who was involved in an
activist campaign directed at Yahoo during the time of the
Microsoft acquisition talks, said that even a $20 a share offer
for Yahoo -- which would represent a nearly 40 percent premium
over Tuesday's closing price -- might encounter resistance from
some of Yahoo's major shareholders.
"There would be some large shareholders in Yahoo that
wouldn't like that, they wouldn't view that as an attractive
exit for them," said Jackson, who no longer owns Yahoo shares.
(Additional reporting by Ken Li and Nadia Damouni in New York,
Alexei Oreskovic in San Francisco, Sachi Izumi in TOKYO;
Melanie Lee, Huang Yuntao and David Lin in SHANGHAI; Writing by
Edwin Chan; Editing by Gary Hill, Dhara Ranasinghe and Lincoln