Buffett Bids On Yahoo

It looks like the long-speculated-upon sale of Yahoo could actually happen.

And possibly at the hands of some rather unexpected buyers: Berkshire Hathaway Chairman Warren Buffett and Quicken Loans Founder (and Cleveland Cavaliers owner) Dan Gilbert. That consortium is one of a few suitors moving into a second round of bidding on Yahoo.

Reports remain a bit hazy at this point, but it appears that Gilbert is leading the bid effort, though there has been no public confirmation by a named source. Berkshire Hathaway seems to be backing the financing for this exercise in a move similar to its role in 3G Capital’s takeovers of H. J. Heinz and Kraft. It will not be negotiating the deal.

The Gilbert-Buffett bid is not the only one going into the second round. Verizon Communications, private equity firms, such as TPG Capital, and a group that comprises Bain Capital and Vista Equity Partners are also among those who will be at the party, according to unnamed sources reportedly briefed on the process.

Thus far, as Yahoo’s efforts to find a buyer have rolled on, the firm has been criticized over the sales process, particularly by prospective bidders and one activist hedge fund, Starboard Value.

The Starboard fight was headed off with board seats (four) for Starboard, including for Starboard CEO Jeffrey Smith.

Yahoo will be a large and troubled buy for any bidder, though one with a very large digital footprint and some valuable assets, particularly its finance and sports sites. Buffett’s move to back Gilbert in the bidding process is something of a departure for the Berkshire Hathaway head given his long aversion to tech investment (with the possible exception of IBM). But Berkshire’s role here is mostly financial, though Buffett’s conglomerate would collect interest from its financing, with the opportunity to convert those holdings into an equity stake in the company.

Former senior Yahoo executives, Dan Rosensweig, chief executive of education company Chegg, and Tim Cadogan, head of online advertising platform OpenX, are both advising Team Gilbert. Neither is looking to rejoin Yahoo.

Reuters initially reported the Gilbert-Buffett bid, but Recode caught the Rosensweig/Cadogan connection.


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