Object of pursuit

New York, Oct. 14 (Reuters): Several private equity firms have approached Internet and media companies, including News Corp and AOL Inc, in recent weeks to gauge their interest in buying out Yahoo Inc, a source said.

A potential deal, however, will be contingent on Yahoo selling its prized Asian assets, including a 40 per cent stake in China’s Alibaba, the source said on conditions of anonymity.

That will help to reduce Yahoo’s market value of more than $20 billion now, making a deal more feasible. Discussions with News Corp and AOL began about two weeks ago and intensified in recent days, but Yahoo had not yet been approached as talks were still in their early stages, the source added.

News Corp, AOL and Yahoo declined to comment. The source did not name the private equity firms.

Speculation of private equity interest in Yahoo, which is struggling to revitalise growth and stem an exodus of senior executives to rival companies, has surfaced sporadically in various Internet reports in past months.

The Wall Street Journal on Wednesday reported Silver Lake Partners and Blackstone Group were among the private equity giants considering buying Yahoo, sending its shares soaring.

Shares in Yahoo, which finished nearly 6 per cent up on Wednesday, gained another 9.5 per cent to $16.71 in extended trading.

The Journal cited people familiar with the matter as saying private equity firms were exploring the possibility of teaming up with AOL on a joint bid, which could give AOL the content and online eyeballs it needs to remake itself into a news and entertainment powerhouse.

The private equity firms were also mulling taking Yahoo private themselves, the Journal reported.

Among the scenarios discussed, one involved Alibaba Group buying back Yahoo’s 40 per cent stake in the Chinese firm and Yahoo selling off assets to rival media and technology companies, the newspaper reported.

Another could involve AOL combining its operations with Yahoo in a reverse merger — again after Yahoo sells its stake in Alibaba, China’s top online commerce firm, it said.