Forbes: Alibaba's acquisition of Yahoo is beneficial to everyone
Yahoo will release its second quarter financial report of 2016 after the closing of the US stock market on Monday. Wall Street analysts predict that Yahoo's revenue in the second quarter of this year will reach 1.08 billion dollars and diluted profit per share will be 10 dollars. At the same time, Wall Street analysts also predicted that Yahoo's revenue in the third quarter of this year would reach $1.1 billion, and diluted profit per share was expected to reach $0.14.
Crucially, Yahoo will not only release the company's second quarter financial report after the closing of the US stock market on Monday, but also announce the end of the bidding process for selling the company's core business. The industry expects that Yahoo will disclose the latest news about the parties' bidding for its core business together with the second quarter financial report. The bidding for Yahoo's core business (including Yahoo Finance, Yahoo Email, Yahoo News, Yahoo Real Estate, Yahoo patents and other assets) has been going on for a long time. Rumors about these bids are also emerging one after another, and the bidding price has also spread from $3 billion to $6 billion. It has always been difficult to uncover what the bidding offer is like.
It is said that the parties interested in bidding for Yahoo's core assets at present include Verizon, AT&T and the founder of Quicken Loans Dan Gilbert (reportedly, Gilbert was supported by Warren Buffett's Berkshire Hathaway Fund), as well as some private equity investors.
Regardless of the final selling price of Yahoo's core assets, compared with the value of Yahoo's investment in Alibaba (15% equity) and Yahoo Japan, it is a piece of cake. The assets in Alibaba and Yahoo Japan can be regarded as the royal treasure of Yahoo's value, and also an important asset to make up for Yahoo's deficiency, even if it does not represent the current full market value of Yahoo.
Selling the investment in Alibaba and Yahoo Japan will create a series of legal and tax issues for Yahoo shareholders. As a result, Yahoo's current share price does not exactly reflect the true value of the company, mainly because of those undisclosed factors.
Perhaps, with the emergence of the above problems, Yahoo's management should directly talk to Jack Ma, the founder of Alibaba, and ask Jack Ma to consider buying all of Yahoo.
It is a well-known fact that Alibaba wants to expand its influence in North America. In this case, a relatively easy way for Alibaba to achieve this goal is to buy all the assets of Yahoo. In fact, Alibaba will buy back Yahoo's stake in Alibaba Group. For Alibaba, this will be a large-scale buyback transaction. Alibaba should also take Yahoo's equity in Yahoo Japan (Softbank is the largest shareholder of the company), as well as Yahoo's various Internet businesses, real estate and patents.
Alibaba has established a relationship with Softbank, which has a large stake in Alibaba Group. Buying Yahoo's stake in Yahoo Japan will help Alibaba invest in a company dominated by Softbank, which in turn will further strengthen the relationship between the two Asian giants (Alibaba and Softbank).
I also think that if Alibaba has no intention of acquiring Yahoo, Softbank should acquire Yahoo. However, given that Softbank has carried out many investment transactions in the past two months, Softbank may not have enough financial strength to completely acquire Yahoo.
If Alibaba and Yahoo can reach an acquisition agreement - the former to acquire the latter, then this will clear all kinds of difficult problems for Yahoo shareholders. Alibaba pays a certain fee to acquire Yahoo's core assets, Yahoo Real Estate, Yahoo patents, Yahoo's 15% equity in Alibaba itself and Yahoo's equity in Yahoo Japan. Alibaba can adopt all cash transaction or cash plus equity, so that Yahoo will be able to gain a strong foothold in the North American market, which will definitely kill two birds with one stone, or even kill three birds with one stone.
Moreover, all complicated tax and legal issues will be gone forever, because Yahoo will find a way to deal with the transaction problems caused by its investment in Alibaba and Yahoo Japan. In a word, if Alibaba buys Yahoo, all parties will be excited, including Alibaba, Softbank, and especially Yahoo shareholders who have been abused for a long time.
What will Alibaba do in return?
The most important thing is that Alibaba can take back the 15% equity held by Yahoo in the company, which can improve the profitability of Alibaba per share without sharing profits for the outstanding equity. This is one of them. Second, Alibaba will also be able to attract almost 1 billion users worldwide in a single month to various channels of Alibaba's website for trading or cross selling. Of course, there may be some overlapping users, but Alibaba can calculate the price of Yahoo's core business accordingly.
Crucially, Marissa Mayer may sing her happy swan song and make a lot of money from the transaction. This is really a good deal, isn't it?
What's your opinion?
At this time, the results of Yahoo's second quarter financial report are no longer as important as discussing the details of the company's selling core business and how the company plans to invest in Alibaba and Yahoo Japan. If the management still foolishly decides not to discuss the relevant details, you can wait and see - Yahoo's share price will certainly fall, no matter how good the second quarter's financial results are.
