Will Yahoo! Inc. (YHOO) Be an Acquiree or an Acquirer Now that the Alibaba Group Holding Ltd (BABA)’s IPO is Over?

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The whole street is speculating how Yahoo! Inc. (NASDAQ:YHOO) will be spending the cash from the Alibaba Group Holding Ltd (NYSE:BABA)’s IPO and everyone has a different take on that. Estimize CEO Leigh Drogen was on Fox Business recently to discuss the future course of action for Yahoo! Inc. (NASDAQ:YHOO), now that the Alibaba Group Holding Ltd (NYSE:BABA)’s IPO is over.

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“So, on our predictions, mergers and acquisitions prediction site Mergerize, we have got 30 predictions on Yahoo now and they range from AOL to Reddit to Yelp and then possibly staying private or getting bought themselves,” Drogen said.

According to Drogen, AOL, Inc. (NYSE:AOL) fits into Yahoo! Inc. (NASDAQ:YHOO)’s business, whichich he described as content. He feels that Marissa Mayer is moving Yahoo! Inc. (NASDAQ:YHOO) towards native advertising business model and away from display and hence acquiring AOL, Inc. (NYSE:AOL) will be a good acquisition, which will also not be very expensive. He considers Yelp Inc (NYSE:YELP) to be another target which Yahoo! Inc. (NASDAQ:YHOO) can acquire, although at a 50% premium it will be slightly above Yahoo! Inc. (NASDAQ:YHOO)’s budget.

Drogen also feels that Yahoo! Inc. (NASDAQ:YHOO) can be a great acquisition target for both Alibaba Group Holding Ltd (NYSE:BABA) and Japan’s SoftBank as both these companies will enjoy significant cost benefits if they acquire Yahoo! Inc. (NASDAQ:YHOO), owing to the stake that Yahoo! Inc. (NASDAQ:YHOO) holds in them. One cause of concern that Drogen mentioned will be that the US government won’t be too happy with a Chinese company acquiring a US tech major.

As of June 30, 2014, D.E. Shaw‘s firm D.E. Shaw owns over 16 million shares in Yahoo! Inc. (NASDAQ:YHOO).


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