Talk of suitor buoys Yahoo
SAN FRANCISCO — Yahoo Inc.’s stock rallied Tuesday on a report that AOL’s former chief executive believes he can raise as much as $30 billion to buy the struggling Internet company.
The Wall Street Journal raised investor hopes with a story that said Jonathan Miller, who stepped down as AOL’s top executive two years ago, is trying to secure financing to make a bid for Yahoo at $20 to $22 a share, or $28 billion to $30 billion.
The story posted on the Journal’s website cited unnamed people familiar with the matter.
Branding the report a “rumor,” Yahoo spokeswoman Tracy Schmaler declined to comment. Miller didn’t immediately respond to interview requests.
Yahoo shares rose 76 cents, or more than 7%, to close at $11.50, reflecting hopes that a new suitor may emerge for the Sunnyvale, Calif., company. The surge left Yahoo with a market value of just under $16 billion.
Given his experience running AOL, Miller has the connections and savvy needed to turn around Yahoo, said Standard & Poor’s Internet analyst Scott Kessler.
But Miller faces a huge hurdle: A credit crunch and the prospect of the deepest recession in a generation have spooked lenders and investment funds so badly that they have shown little interest in making big bets on risky propositions like this.
Miller “has a strong reputation and an expansive Rolodex, but [$30 billion] is a lot of money to raise in an environment when deals are falling apart and companies are going out of business just about every day,” Kessler said.
Speculation about Yahoo’s future has intensified since rival Google Inc. pulled out of a proposed advertising partnership a month ago. Yahoo had been counting on the alliance to boost its profits and placate shareholders incensed that the company rebuffed a $47.5-billion takeover bid from Microsoft Corp.
The guessing game took a new turn two weeks ago when Yahoo founder Jerry Yang revealed his plans to step down as CEO as soon as a replacement could be found.
Yang, who became CEO in June 2007, didn’t want to sell to Microsoft because he believed he had charted a strategy that would prove the company was worth more than the software maker was willing to pay.
Most industry analysts believe Microsoft eventually will return to the bargaining table and buy Yahoo’s search engine -- a concept that has been embraced by Yahoo’s most outspoken board member, Carl Icahn. Microsoft CEO Steve Ballmer also has said he remains open to that idea.
The Times of London tantalized investors during Thanksgiving weekend with a report that Microsoft was preparing to buy Yahoo’s search operations for $20 billion in a complex deal involving Miller and his current partner, former News Corp. executive Ross Levinsohn. But representatives from both Yahoo and Microsoft have since denied that any discussions along these lines are taking place.
