Yahoo CEO Meeting With PE Firms — PIPE Might Be Dead, but What Else Is There?
According to sources close to the situation, new Yahoo CEO Scott Thompson is meeting with the two private equity firms that had made previous partial investment overtures to the Silicon Valley Internet company.
While those deals are now tabled, sources said that Thompson and the Yahoo board still wants to engage investors — Silver Lake and TPG Capital — in discussions about how to best turn around Yahoo.
Thus, sources said, Thompson was interested in meeting with the firms — as well as others involved, such as VC Marc Andreessen, who had been working with Silver Lake — in order to discuss their ideas and get up to speed on them.
And, of course, keep the discussions alive to see if there is any kind of different deal to be done in the future.
That’s after, of course, Yahoo completes its complex negotiations with its Asian partners — Alibaba Group and SoftBank — over selling off parts of its own stakes there.
While Yahoo’s success in resolving Asia is not assured, this transaction was a key part of proposals for a PIPE — Private Investment in Public Equity — deal that both Silver Lake and TPG had made.
But, after shareholders looked askance on such a deal due to price and other issues, Yahoo decided to negotiate on its own and picked a new CEO.
Still, in a have-your-cake-and-eat-it-too move, the company leadership also did not want to close the door on the PE firms (and their money and expertise). completely.
That’s especially true, since the distinct possibility of a proxy fight from activist Yahoo investor Daniel Loeb is now hovering over the company’s neck.
Both Loeb and Yahoo are scrambling to prep for the potential battle. Loeb is trying to assemble a slate of alternate directors, and shoring up other major Yahoo shareholders as allies, while Yahoo is moving to shed some directors while also adding new ones.
Hence, the meetings with PE firms to keep the proverbial ball rolling, which presents at least the facade that the company is intent on turning the core parts of Yahoo around by any means possible.
Sources close to the PE firms remain dubious, with both feeling burned by the last process.
“I’m not sure anything will come of this, and the way Yahoo conducted the last talks was not encouraging,” said one source. “But it does not cost anything to keep listening.”