Buffett backing group bidding for Yahoo Inc.’s core assets

Berkshire had been providing funds for buyouts and patient capital for firms in crisis.

The Dollar Business Bureau

Warren Buffet is said to be backing the group bidding for Yahoo! Inc.’s core assets after famously staying on the sidelines through two Internet booms.

The Chairman of Berkshire Hathaway Inc., Buffett, 85, is supporting a group of investors comprising of Quicken Loans Inc. founder Dan Gilbert in the second round of bidding for Yahoo’s Internet assets.

Berkshire had been providing funds for buyouts as well as patient capital for firms in crisis.

In 2014, Burger King Worldwide Inc. was financially helped by Buffett worth $3 billion with its takeover of Canadian doughnut chain Tim Hortons Inc. In 2008, he helped Goldman Sachs Group Inc. as well value $5 billion during the financial crisis.

In the Burger King and Goldman Sachs contacts, Buffett acquired a combination of preferred shares with relatively high dividends, 9%, and 10% respectively.

“I knew they wouldn’t go out of business,” he told Berkshire shareholders in 2010, explaining an agreement the previous year to buy debt in Harley-Davidson Inc. that paid 15 percent. Unlike buying a stock, whose decision boiled down to whether the company would survive, rather than an analysis of how it and the broader motorcycle industry would perform,” Buffett said.

Yahoo discovered e-mail and the internet in the 1990s, but since then, the tech giant has been struggling in getting it right when it comes to consumer tastes. As a result, in recent times, it was increasingly losing audience and revenue to Facebook Inc., Twitter Inc., and Alphabet Inc.’s Google. 

Yet, display advertising generated the biggest portion of Yahoo’s revenue in the first quarter around 44% of the $859.4 million.  

The relationship between Berkshire and Yahoo in the past has been mutually beneficial. Buffett announced his company’s famous annual shareholder meeting online for the first time in 2016 on the web portal.

The Dollar Business Bureau - May 16, 2016 12:00 IST