Term Sheet

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Private equity's Yahoo interest

October 14, 2011: 10:34 AM ET

Will Yahoo be taken private?

Yahoo (YHOO) still doesn't have a CEO, but it does seem to have a lot of private equity interest. Reports this week suggest that both The Blackstone Group (BX) and Kohlberg Kravis Roberts & Co. (KKR) are sniffing around the digital media company, which already has received some interest from Silver Lake Partners (in coordination with DST Group and Alibaba Group).

So I spoke to someone familiar with the situation who provided two basic messages:

  1. 1. This would be a very complicated deal, due to Yahoo's existing relationships with Alibaba and Yahoo Japan. Moreover, it would be the largest agreed-upon LBO since before the financial crisis. So any deal would be a long ways off.
  2. 2. "Every single private equity firm with a fund greater than $5 billion is at least taking a look." In other words, of course Silver Lake, Blackstone and KKR are kicking the tires. And TPG, Apollo, Bain, TH Lee, etc. probably are as well.

That said, I'd be very surprised if a deal got struck that included Blackstone. Tech is the one sector that Blackstone has tended to generally avoid, and it doesn't have any consumer Internet companies in its portfolio. The closest comp I see might be The Weather Channel, which is a media company with a serious online presence (albeit a company with a more obvious sense of mission/focus than does Yahoo).

In fact, someone recently suggested to me that Blackstone's next major expansion move should be to acquire Silver Lake (not that it's for sale, or that BX is actually interested in massive tech platform expansion). Again, I'm sure Blackstone has nominal interest. But it's a real longshot to get involved and, if I'm wrong, it would likely be the moneyman behind a more experienced Internet investor...

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About This Author
Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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