According to sources close to the company, Time Inc (NYSE:TIME) is thinking of making a bid on Yahoo! Inc’s core Internet assets, partnering with a private equity firm. The IS based company is looking to build and boost its digital presence.
Yahoo’s internet business is estimated to be worth much more several billion dollars than the small market capitalization that Time Inc.’s have. Time Inc. has a market capitalization of $1.6 billion. The thoughts of partnering with a private equity firm shows that the company needs more funds to make the bid.
The company held some meetings with some of the buyout firms. Time Inc. then held a meeting with Yahoo and signed a non-disclosure agreement with Yahoo! That would forbid any communication between bidders involved in the sale process; the sources revealed this week. The sources, however, revealed that Time Inc. was hoping that after the first round of bids had been submitted, which are due on April 11, they would be able to form consortia with other bidders. Time Inc. on its part has not yet selected a potential partner.
Some of the private equity firms which have been thinking of bidding on Yahoo! Include Blackstone Group LP (BX.N), KKR & Co LP (KKR.N), TPG Capital LP, Apax Partners LLP, Warburg Pincus LLC, Bain Capital LLC and Hellman & Friedman LLC according to the insiders.
Time Inc. and its investors have been eyeing a potential deal structure like that of Reverse Morris Trust, the insiders said. This would thus allow Yahoo to divest the assets in a tax efficient manner.
Spokespeople for all parties involved in the bidding process, (Yahoo, Time Inc., and the private equity firms) declined to comment.
Time Inc. CEO, Joe Ripp, has been active in trying to put more cash into the business and wanted to expand the business beyond its print roots. Time Inc. broke from its parent company Time Warner Inc. in 2014. Since the expansion plans, the company has been on a digital shopping spree. The company owns the People, Sports Illustrated and Time magazine.
On the other hand, Yahoo has faced increasing pressure to sell its core business from its investors and shareholders. Most analysts see Verizon as the most likely candidate to win the bidding war for the beleaguered web business.
Time’s revenue annual revenue fell 5 percent to $3.1 billion last year, with print and advertising revenue falling 10 percent to $1.32 billion. However, its digital advertising revenues have been on the upswing and rose 11 percent to $221 million last year.
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