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NEW YORK (Reuters) - Blackstone Group and Bain Capital are preparing a bid for all of Yahoo Inc with Asian partners in a deal that could value the Internet company at about $25 billion, a source familiar with the matter said on Wednesday.
The potential bid by the consortium, which would include China's Alibaba Group and Japan's Softbank Corp, has not yet been finalized, the source and two other people familiar with the matter said.
Chinese e-commerce giant Alibaba, whose primary interest is in buying back a 40 percent stake owned by Yahoo, is keeping its options open and said it has not decided whether to participate in a bid for all of Yahoo.
"Alibaba Group has not made a decision to be part of a whole company bid for Yahoo," Alibaba Group spokesman, John Spelich, said in an emailed statement on Wednesday.
Yahoo's shares, which closed at $15.71 on the New York Stock Exchange on Wednesday, gained 6.4 percent to $16.72 in after-hours trading, valuing the company at more than $20 billion.
"Alibaba definitely wants to get its stake back from Yahoo, so whatever that can make that happen, they will try for it," said Hong Kong-based JPMorgan analyst, Dick Wei, adding Alibaba may finance the deal by taking on more debt or finding a strategic buyer.
Alibaba, run by its founder and billionaire CEO Jack Ma, has ties with some of the world's most prominent private equity funds and a group of investors including Silver Lake purchased a 5 percent stake worth $1.6 billion in early November.
A bid for Yahoo at more than $20 per share would mean a deal value of about $25 billion based on 1.24 billion shares outstanding, potentially making it the largest leveraged buyout in recent years.
Blackstone, Bain and Softbank declined to comment, while Yahoo representatives were not immediately available to comment.
Although a bid for all of Yahoo is not yet on the table, the latest twist turns up the heat on Yahoo's board, which has received at least two offers for a minority stake in the company according to people familiar with the matter. One offer came from a consortium of Silver Lake and Microsoft Corp, and another from TPG Capital. Silver Lake, Microsoft and TPG have declined to comment.
Meanwhile, private equity firm Thomas H. Lee Partners is interested in buying the U.S. operations of Yahoo, people familiar with the matter told Reuters previously. Providence Equity Partners and Hellman & Friedman are also interested in a potential Yahoo deal. Thomas H. Lee, Providence and Hellman & Friedman have declined to comment on the situation.
Bain and Blackstone have a track record of teaming up for joint investments. In 2008, the two buyout firms, in partnership with NBC Universal, bought the Weather Channel.
In 2006, the private equity firms teamed up for a $6 billion buyout of Michaels Stores Inc, the biggest U.S. arts and crafts retailer.
Internet pioneer Yahoo has seen its growth stagnate in recent years due to competition from Google Inc and Facebook and is currently without a permanent CEO as it tries to regain relevance.
Yahoo's board fired CEO Carol Bartz in September and started a strategic review, which has been complicated by the different agendas of players with a say in the situation, including its Asian partners, co-founders Jerry Yang and David Filo, the board and shareholders.
Yang has been exploring a deal with private equity firms to take the company private, according to sources, in part because that would represent his best chance of remaining involved with the company.
Additional reporting by Greg Roumeliotis and Soyoung Kim in New York and Melanie Lee in Shanghai; Editing by Steve Orlofsky, Carol Bishopric and Matt Driskill