Yahoo said to reconsider sale of web business instead of spinoff

Yahoo is warming up to the idea of a sale. 

PHOTO: REUTERS

JAN 9, 20167:42 AM

[NEW YORK] Yahoo is warming up to the idea of a sale.

The company is reassessing whether to spinoff its main Internet business and is considering an outright sale, people familiar with the matter said.

Yahoo still hasn't concluded that it has to sell and hasn't hired a bank to run an official process or contacted potential buyers, said the people, who asked not to identified because a final decision hadn't been made. Nonetheless, there has been a shift in the internal thinking at Yahoo, in part because the company and its advisers now believe they need a new plan in light of an expected proxy fight by an activist investor, said the people.

An outright sale would avoid a possible spinoff of Yahoo's main business, a plan put forward by Yahoo's executives last month. The Dec 9 announcement was a strategic move by Chief Executive Officer Marissa Mayer to buy time to shape Yahoo into a more sellable asset, including cutting costs, said the people, who asked not to be identified because the matter is private.

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Sarah Meron, spokeswoman for Santa Clara, California-based Yahoo, declined to comment.

By waiting longer, the market may also readjust its view of what Yahoo is worth, two of the people said. After accounting for a US$27.7 billion stake in Alibaba Group Holding, US$7.96 billion stake in Yahoo Japan Corp and US$5.88 billion in cash and equivalents, Yahoo's market value of US$28.5 billion shows that investors consider the main business to be worth zero or less, according to Bloomberg Intelligence.

Starboard Value LP and other stakeholders have been pushing for Yahoo to separate the Alibaba assets from its main business without incurring a hefty tax charge. Last month's plan to weigh a spinoff of the core business replaced Yahoo's earlier proposal to return Alibaba shares to shareholders and keep its Web operations intact. By selling the Internet portal, Yahoo would effectively become a holding company for its assets and cash.

Pressure is mounting on Ms Mayer and the board to act sooner. Starboard urged an overhaul of Yahoo's management this week, saying the Internet pioneer's recent decision to spin off its core Web businesses will require shareholders to wait another year "while the existing leadership continues to destroy value."

There are possible buyers. Verizon Communications Chief Executive Officer Lowell McAdam and Chief Financial Officer Fran Shammo, using similar language, both said last month that Verizon would look at a Yahoo deal "if it made sense."

Verizon acquired AOL for US$4.4 billion last year. Yahoo's mail, finance, sports and video sites attract more than 1 billion users, a prized asset that would add to AOL's 2 million users. That kind of Web traffic, along with exclusive content, is appealing to Verizon, which needs to lure and retain a new smartphone-addicted generation.

There are no current sale talks, although advisers continue to work closely with Yahoo on its strategy, the people said. Even though Yahoo may plan to ultimately sell its business, the strategy of publicly charting a course for a spinoff would also give Ms Mayer more time to juggle a sale a few months after the recent birth of her children, the people said.

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Japan's Asahi to submit bid next week for SABMiller's Grolsch and Peroni

Japanese beverage maker Asahi Group Holdings Ltd will submit a bid as early as next week to buy SABMiller PLC's Grolsch and Peroni beer brands for as much as 400 billion yen (S$4.92 billion), the daily Yomiuri reported. 

PHOTO: REUTERS

JAN 9, 201611:02 AM

[TOKYO] Japanese beverage maker Asahi Group Holdings Ltd will submit a bid as early as next week to buy SABMiller PLC's Grolsch and Peroni beer brands for as much as 400 billion yen (S$4.92 billion), the daily Yomiuri reported.

If accepted, it would be the biggest overseas beverage acquisition ever by a Japanese company, topping Kirin Holdings Co Ltd's US$3.3 billion takeover of Australia's Lion Nathan in 2009, the paper said.

Asahi Holdings officials could not be reached for comment.

Anheuser Busch InBev SA, which agreed to buy SABMiller for US$100 billion plus, has been seeking potential bidders to buy Grolsch and Peroni, sources close to the process told Reuters last month.

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Peroni and Grolsch are small, premium brands and AB InBev wants to avoid getting bogged down in regulatory scrutiny over a European portfolio that already includes Corona and Stella Artois, the sources said.

Indicative offers are due in mid-January, with a tight schedule for due diligence in order to clinch a deal by early March, the sources said.

The sources had estimated a potential combined value for Peroni and Grolsch of about 1.8 billion euros (S$2.9 billion), based on earnings before interest, taxes, depreciation and amortisation (EBITDA) of 120 million to 150 million euros and a possible multiple of around 12 times EBITDA.

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Europe: Stocks suffer worst week of losses in more than four years

PHOTO: REUTERS

JAN 9, 20167:53 AM

[LONDON] European shares fell on Friday, with lingering worries about China causing a major regional equity index to suffer its worst weekly loss since August 2011.

The pan-European FTSEurofirst 300 index ended down 1.5 per cent, leaving it with a loss of around 7 per cent over the course of the week.

That marked its worst weekly performance since early August 2011, when it fell nearly 10 per cent during the euro zone's sovereign debt crisis.

Equity markets had received a lift earlier in the day from a rise in major Chinese stock indices, after regulators suspended the circuit breaker mechanism that halted trading twice this week. The shutdowns were blamed for exacerbating the sell-offs they were intended to limit.

Some investors said China's ability to manage its markets had been damaged. A fall in the yuan also raised concerns about a slowdown in China, the world's second-biggest economy.

European stocks failed to hold onto an initial move higher after strong US jobs data. Although the data highlighted momentum in the world's biggest economy, it also showed a fall in average hourly earnings. "Average hourly earnings are not growing, and that's slightly disappointing," said Hantec Markets' analyst Richard Perry.

Francois Savary, chief investment officer at Geneva-based Prime Partners, said the US growth was strong enough to offset the worries about China to a certain extent.

Jonathan Stubbs, European equity strategist at Citigroup, said that he expected European shares to rise this year, thanks to signs of economic recovery in the region and higher corporate profits, but markets would remain volatile.

Stubbs forecast the pan-European STOXX 600 index to end 2016 at 400 points. This would mark a gain of around 17 per cent from its Friday closing price of 341.35 points, but Stubbs expected the ride along the way to be a bumpy one. "We still expect equity returns to be driven by modest growth and some re-rating this year, but volatility is likely to remain near-term," said Stubbs.

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US oil rigs dive to lowest since 2010, more cuts seen

US oil drillers began the year by slashing the number of rigs to the lowest in over five years, data showed on Friday, with analysts saying further reductions are almost certain as producers respond to a deepening oil price rout. 

PHOTO: BLOOMBERG

JAN 9, 20167:14 AM

[NEW YORK] US oil drillers began the year by slashing the number of rigs to the lowest in over five years, data showed on Friday, with analysts saying further reductions are almost certain as producers respond to a deepening oil price rout.

Drillers cut 20 oil rigs in the week ended Jan 8, the third-largest one-week decline since May, oil services company Baker Hughes Inc said in its closely followed report. The reductions occurred across every major shale patch, from the Permian to the Bakken.

The remaining 516 rigs were the fewest since April 2010, according to the data, but few expect the slump to end there. Oil prices have dropped more than US$10 a barrel over the past two months, about half of that in the past week. Lower prices are likely to be reflected in more idled rigs over the coming month or two.

"So long as the price for oil stays low, the rig count will continue to decline," said Arthur Gelber, founder and president of energy consulting and advisory firm Gelber and Associates in Houston.

US oil futures on Friday failed to draw any support from the sharp fall in rigs, settling at US$33.16 a barrel, the lowest since Feb 2004. Investors remain worried about a persistent global glut and a bleak demand outlook.

US crude futures dropped 30 per cent last year.

The rig count decline was the seventh reduction in the past eight weeks and brings the total rig count down to about a third of the 1,421 oil rigs operating in same week a year ago.

In 2015, drillers idled a total of 963 oil rigs, the first annual cut since 2002 and the biggest annual decline since at least 1988, according to Baker Hughes.

Over the prior five years (2010-2014), producers added on average 216 oil rigs per year. In 2015, however, they cut on average 18 oil rigs per week.

US crude futures were trading at higher levels around US$38 a barrel for the rest of 2016 and US$43 for 2017. Some analysts said this could entice producers to return to drilling later this year.

One of the biggest US independent drillers, Pioneer Natural Resources Co, said this week its preliminary 2016 production growth forecast was 10 per cent to 15 per cent compared with 2015.

Pioneer said it still forecasts compound annual production growth of 15 plus per cent over 2016 through 2018, assuming the addition of two rigs to three rigs per year during 2017 and 2018.

This week, drillers cut four oil rigs in the Bakken in North Dakota and Montana, bringing the total to 49, the lowest rig count in the basin since at least 2009.

US natural gas rigs RIG-GS-USA-BHI , meanwhile, fell by 14 this week, knocking the overall oil and gas rig count to 664, the lowest since August 1999.

REUTERS