Another giant company showed interest in taking over Yahoo's business core. Chief Executive Officer of Time Inc. heard that Citigroup Inc. is wooing Yahoo for merger. This presentation from Citigroup really caught his attention especially that that the deal hasn't been reserved.
Time Inc. will be battling other titans like AT&T Inc. and Verizon Communications for Yahoo, placing itself as having little chance to win the competition for merger. Nevertheless, the magazine owner may see it as a worth of the time and effort because it could organize with Yahoo a tax-free deal wherein a company merges with a spun-off subsidiary called Reverse Morris Trust.
Under Reverse Morris Trust, Yahoo CEO Marissa Mayer will not remain with the company. Time Inc. CEO Joe Ripp who is also the finance chief and vice chairman of America Online has bright ideas for Yahoo. If Yahoo made a deal with Time Inc. it does not need to sell if the company's valuation is close its low point. During the past year, Yahoo shares declined 29%, as reported by MSN.
Time Inc. which has headquarters in New York wants to gain Yahoo's digital grasp on users all over the world reaching to more than 1 billion. The magazine company tries to change its print-focused business since more readers are getting their news online while print circulation and advertising earnings drop. It will purchase Viant Technology Inc., the owner of MySpace, in order to get more data that will assist in selling targeted advertising. CEO Joe Ripp called the deal 'game-changing for us'.
"Marketers are selecting media partners that have either data-driven capabilities or premium content," Ripp said. "We will be able to deliver both in a single platform and will stand apart from those that offer just one or the other."
A cash offer which is high enough for the Yahoo board's preference from a bigger company could possibly beat a Yahoo-Time Inc. combination, Bloomberg reports.
Verizon Communications which already owned AOL, has also shown interest in acquiring Yahoo's core business. This includes Mail, the news and sports sites as well as its advertising technology. Yahoo's core business is valued from $6 billion to $8 billion by Sun Trust Robinson Humphrey analysts, according to Reuters.
Yahoo was not the only company that Time Inc., had been interest in. In 2013, Time Inc. almost had partnered with Meredith but dumps the idea to oppose Time Inc. strategy. The plan now is for the company to continue establishing its media presence.
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