Time may bid for Yahoo internet biz.

Feb 23, 2016, 4:44 PM EST
Source: Martin Hawle/flickr

Time may bid for Yahoo's core internet business, sources say.

Bloomberg reports:

Time Inc.’s small size isn’t stopping it from pursuing an acquisition of Yahoo! Inc.’s core business. The $1.5 billion owner of magazines including People, Sports Illustrated, Time and Fortune, has heard a presentation from Citigroup Inc. bankers on pursuing a deal to merge with Yahoo, according to people familiar with the matter. The idea is of real interest to Time Inc. Chief Executive Officer Joe Ripp, said the people, who asked not to be identified because the information is private. Citigroup hasn’t been retained, the people said. Time Inc. would be competing with giants such as Verizon Communications Inc. and AT&T Inc. for Yahoo, putting itself squarely in an underdog role to merge with the business. Still, Time Inc. may see it as a worthwhile effort, because it could pursue a structure with Yahoo called a Reverse Morris Trust, a tax-free transaction in which one company merges with a spun-off subsidiary, the people said. Yahoo CEO Marissa Mayer wouldn’t stay with the company under a Reverse Morris Trust, one person said. Ripp, who became CEO of Time Inc. in 2013, served as finance chief and vice chairman of America Online and has ideas for Yahoo, the person said. A deal with Time Inc. would be a way for Yahoo not to sell when the company’s valuation is near its low point, the person said. Yahoo shares have dropped 29 percent in the past 12 months.

Reuters writes:

Time Inc, which has seen print advertising dollars dry up in recent quarters, has been trying to boost its digital presence through acquisitions of online properties. Time Inc said earlier this month it would buy social networking pioneer MySpace. Earlier this month, the magazine publisher reported a bigger-than expected drop in fourth-quarter profit, hobbled by a strong dollar and a drop in income from print ads, and said ad revenue would likely be flat or fall in the current quarter. The company also said it would buy advertising company Viant as it seeks to boost revenue from its digital properties. Time Warner Inc (TWX.N) spun off its publishing business Time Inc in 2014 to focus on its more profitable broadcasting businesses.

New York Magazine notes:

Time Inc. CEO Joe Ripp reportedly has "new ideas for Yahoo," which sounds promising but optimistic, as he has yet to conceive of new ideas for his own company (aside from buying the owner of MySpace to improve targeted advertising). Ripp has said his focus is on building Time Inc.'s media presence, calling the company a "player of scale in the industry."