Yahoo! Inc. is apparently been on the shopping list of Time Inc. , which publishes People, Time and Sports Illustrated magazines, for weeks with a view of purchasing its core Internet business.
Citing anonymous sources, Reuters announced Tuesday that Time executives have held discussions with bankers on the possibility of acquiring Yahoo.
Time Inc, which announced plans this month to purchase social media network MySpace, wants to scale up its revenues from digital advertising. This decision is widely thought to be informed by declining revenues from print advertising.
Verizon Communications Inc. is another high profile company that wants to purchase Yahoo’s core assets, which consists of its sports and news sites, Mail and its advertising technology.
The core business unit is valued at $6b to $8b, according to SunTrust Robinson Humphrey analysts.
Yahoo officially announced on Friday that its core business is up for sale. However, it remains unclear whether it has hired any investment bank to advise it on the nitty-gritty of the entire transaction.
Time Inc is expected to explore the Reverse Morris Trust deal option with Yahoo. This refers to a tax-free transaction in which one company combines with a spun-off business, reports Bloomberg.
Yahoo CEO Mayer May Exit
Yahoo Chief Executive Officer Marissa Mayer is expected not to be part of the new company after such a transaction, an unnamed source told Bloomberg.
A group of Citigroup Inc investment bankers tabled a presentation to Time Inc executives on the Yahoo deal, though they didn’t retain their services.
Time Inc. this month reported more-than-expected decline in fourth-quarter earnings, mainly due to declining revenues from print advertisements and a stronger dollar. It stated that it expects ad revenue to remain stagnant or decline this quarter.
Time Inc has seen its U.S. fashion, financial, beauty and retail magazines register declining ad income as readers opt to visit the Web for information and news.
In an attempt to turn around its ailing fortunes, it announced this month that it is set to buy advertising firm Viant.
Time Inc was spun off Time Warner Inc in 2014 in a transaction motivated by the latter’s desire to concentrate on its more lucrative broadcasting ventures.
Yahoo has been in turmoil, with both internal and external factors rocking the boat from either side. Just recently, activist investor Starboard Value LP threatening to wage a proxy war aimed at ousting Yahoo’s management.
A dismissed employee recently filed a lawsuit, listing a litany of complaints about the company, including gender discrimination in promotion and the company’s reward system.
Gregory Anderson, a former editor at Yahoo who managed its auto, travel, small business, homes and shopping sites, also said the company’s performance management system is prone to manipulation.
Anderson also said the company dismissed him and other employees in a mass layoff exercise without issuing them with notices, contravening both state and federal law on mass layoffs.