Yahoo! Inc. (YHOO) Worth More Post Breakup Says Gabelli & Co.

Yahoo! Inc. (YHOO)

It has been a really difficult time for both Marissa Mayer and Yahoo! Inc. (NASDAQ:YHOO), as the activist investors raise pressure for a potential merger. According to the investment advisory firm, Gabelli & Co., the last decade Internet giant is worth more if broken into meaningful businesses.

Starboard Value LP raised its pressure on Yahoo! Inc. (NASDAQ:YHOO) for a potential merger with AOL, Inc (NASDAQ:AOL) and selling its existing stake in Yahoo Japan and Alibaba Group Holding Ltd (NYSE:BABA). Analysts are expecting a gain of up to $11 billion from breakup and Starboard has laid a plan to offer more value to the shareholders of the technology firm.

Yahoo! Inc. (YHOO)

Starboard LP further mentioned that the Internet giant has spend over $1.3 billion since 2012 in acquisitions without adding any significant value to the shareholders. According to Gabelli & Co, Yahoo’s shares could rise up to $51 post breakup. Brett Harris, Analyst at Gabelli, said,

“This is a very classic sum-of-the-parts story: If you can break up the company into its different parts, it would be worth a lot more.” He further added, “The last thing shareholders want is the management team going out and trying to be venture capitalists.”

Harris said that Yahoo is a good acquisition target for Alibaba Group Holding Ltd (NYSE:BABA) and Softbank Corp (TYO:9984). Alibaba Group could buy back its shares from yahoo whereas Softbank Corp can increase its stake in Yahoo Japan Corporation (TYO:4689).

As per the data compiled by Bloomberg, Yahoo has lost both its revenue and EBITDA since Mayer became the CEO and started a spree of takeovers. Yahoo! Inc. (NASDAQ:YHOO)’s EBITDA has fallen to $948 million from $1.8 billion along with a 7% decline in revenue during the same period.

This article has been written by Prakash Pandey.

Related posts




Warren Buffett's Best Picks

Warren Buffett's these stock picks will crush the market over the next 12 months. Get our report FREE by becoming a member now