Billionaire investor Warren Buffett, UK tabloid The Daily Mail, Google parent Alphabet Inc., and US telecom AT&T have all expressed interest in buying Yahoo, or parts of it, which has been looking for a new suitor since December 2015. According to a new report from The New York Post, Twitter Yahoo merger could be highly likely as the management teams of both met to discuss merger possibilities, but the talks ended without an agreement.
The merger dialog took place several weeks ago for several hours where the execs of the struggling social network and the ailing tech company discussed the financial state of Yahoo! and whether a merger seemed like a strategic move.
“Twitter is the destination for instant news, and Yahoo has a lot of eyeballs on its site,” said one source. “The idea isn’t as crazy as you might think.”
The New York Post also reported that Twitter CEO Jack Dorsey was not present during the meeting, and sources revealed Twitter mainly appeared "mainly interested in sucking information out of Yahoo, as it bowed out of the bidding process soon thereafter."
Second-round bids for Yahoo sale are due next week, with telecom giant Verizon leading. Its other suitors include the aforementioned Warren Buffett, AT&T, Quicken Loans founder Dan Gilbert, and a few private equity firms. Highest bids could reach $4 billion, with $3 billion in debt financing and an equity check as big as $1 billion.
Jack Dorsey is going to have a difficult time reassuring shareholders and the stock market about the Twitter Yahoo merger, as the company has enough growth problems, including its shrinking user base. During its Q1 2016 results, it reported revenue of $595 million, up by 36 percent year-on-year, but below the average analyst expectation of $607 million.
For Yahoo CEO Marissa Mayer, it’s a win-win. If Mayer is dismissed from the company after a Yahoo buyout, she is in for $59 million, based on the terms of the most recent proxy statement.
The Twitter Yahoo merger talks are in early stage and it could take months before the transaction takes place.