Former AOL CEO Jonathan Miller is talking with investors about buying Yahoo, according to The Wall Street Journal. After walking away from a four-year stint as head of AOL in 2006, Miller is looking at what some observers consider an unlikely deal for an Internet property that has taken some lumps.
According to the Journal, Miller hopes to put together a deal that would give Yahoo shareholders $20 to $22 a share. That means raising about $28 billion to $30 billion to buy all of Yahoo.
Microsoft bid $44.6 billion for Yahoo in late January. Yahoo's board unanimously rejected that offer and said it would not even consider discussing an acquisition unless Microsoft anted up at least $12 billion more.
Miller Not a Stranger
Miller has reportedly been talking with a spectrum of potential funding sources, including private-equity investors and wealth funds, for months, but the Journal's sources said it's unclear how those talks are progressing. Yahoo couldn't immediately be reached, but the company's policy is not to comment on speculation.
The effort reflects the tremendous value that Yahoo still holds, according to Greg Sterling, principal analyst at Sterling Market Intelligence. The online advertising market where Yahoo operates is growing fast, from more than $40 billion in 2007 to nearly $80 billion projected by 2010. This market is increasingly dominated by Google, but Yahoo is second and analysts said its assets are worth more than its stock price indicates.
"Miller has been involved in the Microsoft-Yahoo negotiations, so he's an insider," Sterling said. "He also ran AOL, so he would have the confidence of potential private-equity investors."
As a partner at the investment firm Velocity Interactive Group, Miller counseled both Yahoo and Microsoft on how to come to an agreement. The controversial merger failed, and so have many of Yahoo's alternative prospects.
Can Miller Get a Deal Done?
Most recently, Yahoo's proposed search-advertising deal with Google fell through. That's when Yahoo hinted that it wanted Microsoft to provide an escape despite spurning the software giant's offer. But Microsoft has said it has no interest in acquiring Yahoo. News Corp. and AOL have also been mentioned as possible Yahoo suitors, but a deal remains elusive for the ailing Yahoo.
Miller's quest may not yield any different result. Despite the potential, Sterling said the deal is a long shot given the economy and the difficulty Miller would have in raising enough money to pull it off. However, news of the talks -- and Wall Street's reaction -- shows the market wants some sort of big deal with Yahoo.
Yahoo's stock price rose more than 10 percent this week. The stock was trading at around $11 a share Wednesday afternoon.