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 The deliberations on finding a partner to help fund the potential
deal underscore Time Inc's limited resources. Yahoo's web business
is estimated to be worth several billion of dollars more than Time
Inc's market capitalization of just $1.6 billion.
Time Inc held conversations with buyout firms before signing a
non-disclosure agreement with Yahoo recently that forbids bidders in
the sale process from communicating with each other, the people said
this week.
However, Time Inc is hoping that Yahoo will allow bidders to form
consortia after they submit first-round bids that are due on April
11, the people added. Time Inc has not yet selected any private
equity firm as a potential partner, the people said.
Several private equity firms are weighing bids for Yahoo's internet
assets including Blackstone Group LP <BX.N>, KKR & Co LP <KKR.N>,
TPG Capital LP, Apax Partners LLP, Warburg Pincus LLC, Bain Capital
LLC and Hellman & Friedman LLC, the people said.
A potential deal structure that Time Inc and its investment bankers
have been considering is a Reverse Morris Trust, the people said.
This could potentially allow Yahoo to divest assets in a
tax-efficient manner, the people added.
Spokespeople for Yahoo, Time Inc and the private equity firms
declined to comment.
Since Time Inc spun out from parent company Time Warner Inc <TWX.N>
in 2014, its chief executive, Joe Ripp, has been vocal about putting
more cash into the business and expanding the company beyond its
print roots.
The New York-based company, whose titles include People, Sports
Illustrated and its namesake Time magazine, has been on a digital
shopping spree in recent months.
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In February, it acquired Viant Technology, a New York-based
marketing firm that owns Myspace, an early social media company.
Last fall, it bought HelloGiggles, a lifestyle website owned by
actress Zooey Deschanel, and xoJane, an online magazine geared to
women.
Yahoo faces increasing pressure from shareholders and investors to
sell its core business instead of going through a spinoff that would
separate the company from its stakes in Yahoo Japan <4689.T> and
Alibaba Group <BABA.N>.
Analysts see Verizon <VZ.N>, the large telecommunications company
that bought AOL last year for $4.4 billion, as being a more likely
candidate to prevail in the auction for Yahoo's web business.
Time Inc's revenue annual revenue fell 5 percent to $3.1 billion
last year, with print and advertising revenue falling 10 percent to
$1.32 billion. However, its digital advertising revenues have been
on the upswing and rose 11 percent to $221 million last year.
(Reporting by Liana B. Baker and Greg Roumeliotis in New York;
Editing by Cynthia Osterman)
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