The bid for Yahoo web assets just got twice as intense after investor extraordinaire Warren Buffett is being rumored to back a consortium in the bid through financing them. There is scarce information on the group that is now in the second bidding among nine others that Yahoo has narrowed down to. The owner of the basketball team Cleveland Cavaliers Dan Gilbert is using his company Quick Loans in the bid. It is, however, unclear whether Warren Buffett is using his multi-billion companies, Berkshire Hathaway, in the bid.
News about Yahoo seeking to sell some of its assets to stay afloat began early this year. The company has been experiencing insignificant returns despite a market capitalization of $33billion. The company’s stakes dwindled with the Chinese e-commerce giant Alibaba and Yahoo Japan. Analysts are valuing the company at an average of $8billion after a long struggle for online and mobile advertisements with some of their biggest competitors such as Google, Alphabet, and Facebook.
The company hired CEO Marissa Mayer four years ago from Google to try and revitalize the company that had started following a downward trend. The move has not panned out as expected leading to falling outs and disagreement among its board members. Activist’s hedge fund Value LP is alleged to have tried to stage a coup on the board recently.
The acquisition initially attracted some of the biggest online communication companies such as AT&T, Verizon, and Comcast. The most eligible company since the acquisition rumors started was Microsoft. The likability emanated from the two companies’ longtime relationship in the search engine and online advertising. Microsoft was interested in buying out some of Yahoo’s core internet businesses which include the search engine, email, and yahoo news. Microsoft had however predicted the state after the former CEO Steve Ballmer tried to acquire Yahoo for $45billion as early as of 2008. The amount has significantly gone down, and if Microsoft wins the bid, it will be worth the wait.
Warren Buffett is going to change the bids incline to communication companies with his vast experience in acquisitions and network of influence. In the Berkshire Hathaway's annual meeting last month, Warren commented on the deteriorating state of Yahoo but did not mention anything about his company joining the bid. He, however, talked about his company’s slow nature of responding to technology investments and the need for things to change at Yahoo. The writings were clearly on the wall as Yahoo streamed live the famous shareholder meeting and was able to draw 1.8 million views.
Yahoo has been under a lot of pressure since the stagnant growths began but are choosing to keep news about the bid on a down low to avoid speculations and assumptions and probable sabotages. Warren’s entrance to the acquisition bid is expected to drive up the sale of the company something its shareholders would appreciate immensely. Warren’s decision to bid for Yahoo seems very informed. Sources say the advice to participate in the acquisition has been influenced by Susan Decker, a board member at Berkshire, who served at Yahoo for almost nine years in senior capacities.
Who is Warren Buffett?
The man Warren Buffett is among the most successful investors in the world and always ranks top among the wealthiest people in the world. His love for charity sets him apart from his peers. He supports the Gates Foundation and now supports several cancer awareness organizations after his successful fight with prostate cancer. He is a political partisan and has endorsed Hilary Clinton in the current political climate.
The partnership between Warren and Dan Gilbert will not be a surprise once it is confirmed. The two have a longstanding friendship in both business and philanthropy. Dan was among the first signatories in Warren’s philanthropic foundation dubbed the giving pledge. In a surprising turn of events, many wealthy business people signed up for this noble cause where they promise to give at least half of the net worth to charity. Dan Gilbert has a 4.5billion estate from the reselling of his company Quick loans one of the original mortgage businesses in the US. He has other investments and together with Warren, Wall Street predicts a very tough acquisition bid.
At the moment, Yahoo has put its house in order by reorganizing the bid to look more focused and unbiased. They have also made peace with their activist investor Starboard Value. Everyone is keen to see who wins the bid.