Bidding process for Yahoo at a dead end?

Company's decision to ban potential suitors from discussing their bids with each other is the keeping them from signing agreements to see nonpublic financial documents, sources tell Reuters.

Yahoo headquarters
Yahoo headquarters. Yahoo

The bidding process for Yahoo has been stalled by the company's decision to ban potential suitors from talking with each other, sources familiar with the situation tell Reuters.

Most private-equity firms and potential buyers considering a bid for the Web pioneer have not reviewed the financial documents Yahoo began circulating two weeks ago because of a non-disclosure agreement that must be signed before they get access to nonpublic financial data, according to the report

The agreement, which forces bidders not discuss their bidding plans with any other company that might be considering making an offer, is designed to boost bids with increased competition as well as prevent bidders from combining their cash into one big offer.

"It's a stalemate," said one source familiar with the process told Reuters.

Bidders may also be waiting to see what the company will do with its holdings in Asia. Yahoo is exploring a potentially tax-free way to unload its stake in the Chinese e-commerce company Alibaba, which is valued at $14 billion, according to a Wall Street Journal report. The strategy could save the company $5 billion, according to the report. Yahoo is also reportedly considering a similar strategy for its stake in Yahoo Japan.

Yahoo declined to comment on the report. But Yahoo co-founder Jerry Yang said last week that the company's board of directors was considering a number of strategic options, including the sale of the company intact or in pieces.

"The intent going in is not to put ourselves for sale," Yang said at the AsiaD conference. "The intent is to look at all the options. So far we have not ruled out any possibilities."

Yang himself is reportedly interested in taking the company private in a deal that might center on Yahoo selling off its international assets, paying off debt, and then focusing on its U.S. operations.

Despite its high employee attrition rate and sputtering product development efforts, Yahoo has been attracting a lot of attention from possible suitors. In addition to Yang's reported interest, the company has reportedly attracted the attention of venture capitalist Andreessen Horowitz , fellow dot-com wunderkind AOL , and even Microsoft , which launched a failed bid for Yahoo just a few years ago.

 

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