Yahoo Shares Gain After Silver Lake PIPE Offer Report

Shares of Yahoo shares rose two percent in early trading after a report private equity giant Silver Lake Partners was bidding $16.60 a share for the troubled search engine and media company.

Yahoo shares rose 25 cents to $15.95 in the first hour after Bloomberg reported Silver Lake's bid, which also cited insiders who said that bid was than others from private equity companies. By the close, though, Yahoo shares had gained only a penny, closing at $15.71, despite the overall market surge.

The board of the Sunnyvale, Calif.-based company was scheduled to meet Wednesday. Yahoo-co-founder Jerry Yang, 43, is a director as well as owner of about five percent of Yahoo's shares, as is other co-founder David Filo.

Other private equity companies said to have explored a Yahoo bid are TPG, formerly known as Texas Pacific Group; Blackstone Group; Kohlberg Kravis Roberts and Thomas H. Lee.

The private equity investors would be acquiring a minority stake in Yahoo via a vehicle dubbed a PIPE, or private-investment-in-public equity, which would leave a minority stake of the company in friendly private hands.

Yahoo has an enterprise value of $17.4 billion.

Microsoft, the world's biggest software company, has also explored an investment in Yahoo, with which it's made partnerships for search.

Earlier, China's Alibaba Group, in which Yahoo has a 40 percent stake, indicated it would be interested in bidding for the whole company. CEO Jack Ma announced that at Stanford University in September and reportedly lined up financing from Temasek Holdings, the Singapore state investment company.

Cupertino, Calif.-based Silver Lake, which has twice acquired disk drive giant Seagate Technologies and sold it, might also be working with Andreesen Horowitz, a venture capital firm part-owned by Netscape co-founder Marc Andreesen, a now a director of Hewlett-Packard, Bloomberg reported.

Bloomberg LP, the private holding company mostly owned by New York Mayor Michael Bloomberg, is an investor in Andreesen Horowitz.