The Wall Street Journal is reporting that AOL and several private equity firms, including Silver Lake Partners and Blackstone Group, are "exploring the possibility" of bidding for Yahoo or taking it private on their own.
The WSJ report is careful to note that no deals have been cut and that Yahoo isn't even involved in any of the discussions at this stage. What you essentially have are some big names eyeing a company that has continued to struggle under the Carol Bartz administration and may be ripe for some time to reshape, restructure and take a break from the demands of Wall Street for a while.
While it's doubtful - almost laughable - that AOL has the heft to pull off any Yahoo bid, its alleged partners have plenty of capital. Silver Lake Partners has taken Avaya, Sungard and Seagate private and specializes in large-cap technology companies. Blackstone is a well-known private equity firm, which landed a $3 billion investment from China's state investment fund.
The report falls on the heels of a strong day for Yahoo on Wall Street, Shares were up more than five percent in regular trading, closing at $15.25, Shares continued to rise, up more than 10 percent, in after-hours trading.
The unnamed sources in the report also told the WSJ that "at least two or three other firms could be interested in participating if a formal buyout proposal is drawn up" and that the "conversations may not even lead to an approach given the complexities inherent in structuring a proposal."
On All Things D's Boomtown blog, Kara Swisher reports that key players here include the execs who run Yahoo-affiliated companies in Japan and China, such as Alibaba, that keep Yahoo's valuation up.
The WSJ report notes:
One of the scenarios under discussion among the buyout firms is a complex deal in which China's Alibaba Group would buy back Yahoo's roughly 40% stake in the company, the people said. Some of Yahoo's other assets would also be sold off to interested media or technology companies, and the remaining company would be of a much smaller valuation that private-equity firms could get financing for, one of the people said.
Another scenario involves AOL combining its operations with Yahoo in a reverse merger after Yahoo disposes of the Alibaba stake, the people said. It is unclear if the resulting entity would be listed publicly or taken private.
Yahoo reports third-quarter earnings on Tuesday.
Larry Dignan contributed to this report.