Will Yahoo Get Bought?

Fred Wilson at A VC speculates that Yahoo would be a good deal for an acquirer right now:

“Here are the facts. Yahoo! trades at a $34bn market cap. They generate almost $500mm per quarter in cash flow, that’s $2bn per year. So on the face of it, it appears that Yahoo! trades at 17x this year’s cash flow. But that is misleading because Yahoo!’s got a bunch of cash on its balance sheet and also owns a nice chunk of Yahoo! Japan. So after you take out that cash and Yahoo! Japan, Yahoo!’s core business might trade at something like 12-13x EBITDA. You could pay an acquisition premium to the public shareholders and still make a return at that price.”

Fred explores the possible suitors: News Corp, Comcast, Time Warner and — the most likely — Microsoft. But Fred says it’s a longshot that a deal will happen: “I think the chances that Yahoo! actually does get bought is slim, but even the fact that the market is having this discussion is a wake up call for Yahoo!’s board, management, shareholders, employees, and customers.”

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