Yahoo! Inc. (NASDAQ:YHOO) is reportedly attracting attention from Alibaba Group Holding Ltd (NYSE:BABA) as a potential takeout stock according to former Apple Inc. (NASDAQ:AAPL) CEO, John Sculley. During an interview on Fox Business, Sculley said that Alibaba would buy Yahoo as an entry point for the U.S markets.
A takeover in this case would come as a surprise considering Yahoo wanted to buy Alibaba before it became a magnet of e-commerce in China. Sculley believes Yahoo! Inc. (NASDAQ:YHOO) would be left with no option should Alibaba Group Holding Ltd (NYSE:BABA) make advances considering it has been an underperformer in the recent years.
“[…] Jerry Yang is going to be the kingmaker I think if a deal is ever constructed. Jerry Yang is a key player as the co-founder of Yahoo! Inc. (NASDAQ:YHOO) and Marissa is a key talent, and she’s got her back against the wall. There is no future in display ads and mobile is still a very small market share,” said Mr. Sculley.
Yahoo! Inc. (NASDAQ:YHOO) has been under immense pressure in the recent past especially from activist investor Starboard, which is urging the company not to pursue any new acquisitions with the Alibaba Group Holding Ltd (NYSE:BABA) cash. Fox Business Charles Payne, on the other hand, argues Yahoo may seek to do something big with its bumper cash balance instead of opting to be acquired by Alibaba.
Morgan Creek Capital Management CEO, Mark Yusko, on the other hand, believes Alibaba Group Holding Ltd (NYSE:BABA) should focus on unveiling itself to other tech companies in the U.S by setting base, before pursuing Yahoo! Inc. (NASDAQ:YHOO) as a takeout stock. Sculley remains adamant that Yahoo acquiring AOL, Inc. (NYSE:AOL) would be a big mistake at the moment as both companies are engulfed in problems on their core-businesses.
The fact that there is no company looking to buy Yahoo! Inc. (NASDAQ:YHOO) in the U.S according to Sculley could present an opportunity for Alibaba Group Holding Ltd (NYSE:BABA) to pursue such a deal.
“I don’t see anyone in the U.S wanting to buy Yahoo! Inc. (NASDAQ:YHOO). There is nothing a lot there because Marisa would probably leave. I think the best play is the one we’ve been talking about, which is go for the long balls see if there is a relationship. My guess is Jack Ma, and Marissa would probably get along really well,” said Mr. Sculley.
In the second quarter of 2014, D. E. Shaw upped his stake by 48% in Yahoo! Inc. (NASDAQ:YHOO) and now owns 16.19 million shares of the company.