Publisher thinks it's Time to go for Yahoo
Published 24/02/2016 | 02:30
Time Inc's small size isn't stopping it from pursuing an acquisition of Yahoo's core business.
The $1.5bn owner of magazines including 'People', 'Sports Illustrated', 'Time' and 'Fortune' has heard a presentation from Citigroup bankers on pursuing a deal to merge with Yahoo, sources said.
The idea is of real interest to Time chief executive Joe Ripp. Citigroup hasn't been retained, the sources said.
Time would be competing with giants such as Verizon Communications and AT&T for Yahoo, putting itself squarely in an underdog role to merge with the business.
Time may see it as a worthwhile effort, because it could pursue a structure with Yahoo called a Reverse Morris Trust, a tax-free transaction in which one company merges with a spun-off subsidiary.
Yahoo chief executive Marissa Mayer, inset, wouldn't stay with the company under a Reverse Morris Trust, one source said.
Mr Ripp, who became boss of Time in 2013, served as finance chief and vice chairman of America Online and has ideas for Yahoo, the source said.
A deal with Time would be a way for Yahoo not to sell when the company's valuation is near its low point, the source added. Yahoo shares have dropped 29pc in the past 12 months.
A cash bid that's high enough for the Yahoo board's liking from a larger company would probably trump a Yahoo-Time combination, one of the people said. Representatives of Time, Yahoo and Citigroup declined to comment.
Time, which was spun off from Time Warner in 2014, is only interested in the Yahoo core business, sources said. Because of the advantageous tax benefits to a Reverse Morris Trust, Time could compete with larger bidders. (Bloomberg)