Exclusive: PE firm eyes buyout for Yahoo's U.S. business

Tue Nov 29, 2011 8:30am EST
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By Nadia Damouni

NEW YORK (Reuters) - Thomas H. Lee Partners is interested in buying the U.S. operations of Yahoo Inc, breaking away from other bidders that are for now eyeing either a minority stake or teaming up with the Internet giant's partners in Asia, sources familiar with the matter said.

THL is hoping to do a leveraged buyout of Yahoo's U.S. business - which could be worth $5 billion to $6 billion - and draw on its experience running other media assets such as Nielsen Co, Clear Channel and Univision to turn around the ailing company, the sources said.

In taking this approach, THL is charting a different path than other private equity firms such as Silver Lake, KKR and TPG, which are expected to put in bids for a stake of up to 20 percent in the company on Monday, sources said.

Microsoft Corp is helping to finance a possible Silver Lake investment in Yahoo, which has a market value of about $19 billion, the sources said.

Yahoo's board is expected to meet on Tuesday to assess the possibility of a minority investment, the sources said.

Another group of firms, including Blackstone Group, Bain Capital and Hellman & Friedman, is in talks to team up with China's Alibaba Group and Japan's Softbank Corp, the sources said.

Any deal for Yahoo is still some time away. But THL's interest adds yet another twist in the behind-the-scenes maneuvering as bidders jockey for the best position to eventually forge a deal for Yahoo, betting they can turn around the company's fortunes with better management.

The Internet pioneer has seen growth stagnate in recent years due to competition from the likes of Google Inc and Facebook, and is currently without a permanent CEO as it tries to regain relevance in the new dot-com era.   Continued...