The Wall Street Journal reported earlier this week, citing sources with knowledge of the matter, that Yahoo’s board is meeting to consider how to maximize the value of its 35% stake in Yahoo Japan (worth $8.5 billion), and its 15% stake in Chinese e-commerce giant Alibaba Group, currently valued around $32 billion. Apparently, both a sale and a spinoff of the Internet business are possibilities as the board evaluates its options.
On Wednesday, December 2nd, the WSJ is reporting that Japan’s SoftBank, the owner of Sprint Corp. and other telecommunications and digital businesses, is a potential bidder for all or part of Yahoo, as the U.S. internet titan has seen limited growth in its Internet operations.
Since new President Nikesh Arora, who came to SoftBank less than a year ago from Alphabet / Google, the firm has been pushing to for more growth in its Internet and media businesses. Over the last year, SoftBank has made investments in Asian ride-sharing firms and American movie studio Legendary Entertainment.
Industry analysts point out that snapping up Yahoo’s internet operations would instantly make SoftBank a global player in the sector, notably widening its digital platform for entertainment and e-commerce outside of Japan.
Softbank eyeing Yahoo?
SoftBank is already a major player in digital services in Japan, and offers various digital services that piggyback on its mobile platform. The firm is also one of three big wireless networks in Japan, and is also the largest shareholder in Yahoo Japan Corp. , which is separate from the U.S. company.
Masaki Hanyu, a spokesperson for Yahoo Japan, said the firm is keeping a close eye on the situation.
“We would like to have close talks with Yahoo Inc. to come up with the best solution,” he commented. “Under the circumstances, nothing has been decided yet.”
The WSJ sources note that Yahoo is also considering a sale of its web properties, which had opposed by the board of the firm until recently.
Analysts point out that selling off its internet assets would get rids of some notable obstacles to a bid by SoftBank for Yahoo
Of note, SoftBank is already the largest shareholder in both Alibaba (where it holds a 32% stake), and in Yahoo Japan (where it holds a 43% stake). Adding Yahoo’s holdings would result in SoftBank holding majority ownership of these firms, but SoftBank founder Masayoshi Son has commented previously he prefers just having minority holdings in the two companies.
Obviously, selling off two significant assets would also make Yahoo a more affordable target for credit-constrained SoftBank.
Some analysts doubtful
However, under the leadership of new CEO Arora, SoftBank has been making venture capital-style investments in fast-growing startups in markets such as India and Southeast Asia, and Yahoo clearly doesn’t fit in that category.
“I think the U.S. Internet business is not so attractive for SoftBank at the moment,” noted Satoru Kikuchi, an Internet analyst at SMBC Nikko Securities. “They want to focus more on Asia.”
Also keep in mind that SoftBank has stated that it plans to work on deleveraging after taking on a large debt load because of various deals over the last few years, especially the Sprint acquisition.