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Second Round Of Bids For Yahoo Ending Early June; Bob Peck Maintains At Buy

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Second Round Of Bids For Yahoo Ending Early June; Bob Peck Maintains At Buy

The second round of bids for Yahoo! Inc. (NASDAQ: YHOO) are expected to be completed in early June.

Robert "Bob" S. Peck of SunTrust Robinson Humphrey maintains a Buy rating on the company, with a price target of $44.

Peck believes Verizon Communications Inc. (NYSE: VZ) is the leading contender for Yahoo’s core business, which the analyst values at $6–$8 billion.

Peck pointed out that investors had several questions regarding the ongoing sale process.

Related Link: Buffett On Yahoo Bid: If Dan Gilbert Needs Financing, We'll Help

Top 10 Questions

  • 1. Investors have been wondering about how many rounds of bidding the company would undertake and how it would decide which bids make it to the next round.
  • 2. Peck mentioned that investors have questions regarding the tax cost basis for the core, while stating, “Management alluded it could be in the 10Q but it wasn't — we think the tax cost basis could be in the $3 billion vicinity.”
  • 3. Do the bids need to include intellectual property and/or real estate and other PPE? Investors have been wondering what Yahoo’s plans would be if the company is unable to sell these assets at the same time as the core.
  • 4. The next question concerns whether Yahoo is considering only all-cash bids, and if there is a stock component, how the company intends to isolate Asian investments.
  • 5. “Media reports suggest key employees (Robby Stein) continue to leave. Given extensive layoffs and impending sale, how is employee morale?” the analyst asked, while wondering how it would impact core performance and the sale price.
  • 6. If the board does agree to a transaction, there have been questions regarding the time frame and conditions of deal closure.
  • 7. Another key question concerns the changes to Yahoo’s incorporation, following the sale of the core.
  • 8. “After the core sale, is there a tax efficient way to unlock the Alibaba and Yahoo Japan shares for shareholders?” Peck asked.
  • 9. Peck also pointed out that investors wanted to know what an appropriate discount to the NAV would be for the shares of the remaining company, if the tax outcome was uncertain.
  • 10. Finally, Peck questioned whether a core spin would still be a viable option for Yahoo if the sale process was unsuccessful and what the timeline for that process would be.

Latest Ratings for YHOO

DateFirmActionFromTo
Oct 2016DowngradesBuyHold
Oct 2016DowngradesBuyHold
Oct 2016MaintainsBuy

View More Analyst Ratings for YHOO
View the Latest Analyst Ratings

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