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

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.

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