Despite all the rumoured interest in Yahoo Inc, progress on a deal has hit a brick wall mainly due to the company’s lack of strategy and restrictive confidentiality agreement, people familiar with the situation said.
Most of the private equity firms and strategic buyers considering a bid for the Internet giant have still not looked at the financial documents Yahoo began circulating two weeks ago because the confidentiality agreement, once signed, restricts their ability to form consortiums, these people said.
“It’s a stalemate,” said one source familiar with the process, referring to the standoff between Yahoo and its suitors.
According to the sources, private equity buyers are holding off on signing the agreement because they want to explore potential partnerships before committing to the non-disclosure.
Bidders also want to first figure out the plans of Alibaba and Softbank Corp — Yahoo’s joint venture partners in Asia — as well as Microsoft, which is participating in deal discussions in part to protect its interest in a 10-year Internet search partnership it struck with Yahoo in 2009.
“Private equity firms are not signing up; they want to wait and see what the structure looks like that Jack Ma and Masayoshi Son put together,” said a second person close to the situation, referring to the Alibaba and Softbank founders.
It is also seen as a half-hearted auction, with various Yahoo board members having differing views on whether to sell the company at all, said two sources.
Yahoo said the board “is conducting a comprehensive strategic review” to return Yahoo to growth and will “take the time it needs to select the best approach.”
Yahoo advisers Goldman Sachs and Allen & Co informed interested parties last week of a “no cross talk” provision, which is part of a non-disclosure agreement that they have to sign to gain access to company’s financial information.
Among the parties interested in Yahoo are Silver Lake, TPG Capital, Bain Capital, Blackstone, Kohlberg Kravis Roberts, Providence Equity Partners, Hellman & Friedman, Carlyle Group, and Russian technology investment firm DST Global, according to several people familiar with the matter. Google is also taking part in the still-developing discussions, two sources said.