Help wanted: 40 thieves to help steal Yahoo!
Over the weekend, the rumor mill ran full-tilt concerning a planned buyout of Yahoo! by its own subsidiary: Alibaba of China. Asked whether he would use Yahoo!'s weakness to reclaim the 40% Alibaba stake he sold years ago, CEO Jack Ma replied that not only did he want his company back -- he was "very interested" in buying the rest of Yahoo!, too. But if that sounds like a boast, it isn't.
Bloomberg reports today that Alibaba is in discussions with Russia's Digital Sky Technologies and private-equity firm Silver Lake about making a joint bid for Yahoo! Now, I don't know about those latter two ... but for Alibaba in particular, a deal to "eat the parent" makes a lot of sense.
Consider: As Yahoo! floundered in U.S. markets, failing to deliver the promised savings from its partnership with Microsoft
As for the remainder -- $7 and change -- when you apply it to Yahoo!'s $0.88 in trailing earnings, it works out to a valuation of only 8.5 on a "rump Yahoo!" In other words, the company wouldn't have to grow too much faster than the rate of inflation to justify a purchase.
Foolish final thought
That is to say, so long as it's Alibaba doing the buying. I suppose a Silver Lake or DST -- or even AOL
But it might work for Alibaba. For the sake of suffering Yahoo! shareholders, let's hope it does work out.
Can Alibaba seal (steal?) the deal? Will Yahoo! sign on the dotted line? Add it to your Fool Watchlist, and read along as the story unfolds.