And the Bidding for Yahoo Begins

Geoff Duncan:

Yahoo’s current strategy seems to be offering a minority stake of just under 20 percent of the company using PIPE transactions — Private Investment in a Public Equity. If Yahoo keeps the proportion of the deal under 20 percent of the company, Yahoo’s board of directors can approve the deal without putting it to a shareholder vote. PIPE transactions are generally considered the province of less-than-reputable companies: they’re essentially a strategy that allows major changes in company ownership without shareholder approval. If Yahoo conducts such a transaction, it’s almost certain to further alienate its investors — unless it can generate tremendous amounts of cash from the sale.

Ignominious.

★ Wednesday, 30 November 2011