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Yahoo Said to Be in Discussions to Dispose of Japan Venture

Yahoo Said to Be in Talks to Dispose of Japan Joint Venture
Yahoo! Inc. headquarters in Sunnyvale, California. Photographer: Tony Avelar/Bloomberg

March 2 (Bloomberg) -- Yahoo! Inc. is in talks to dispose of its 35 percent stake in its Japanese joint venture with Softbank Corp., according to two people briefed on the matter.

The talks focus on transferring its stake in Yahoo Japan Corp. to Softbank, said the people, confirming an earlier Reuters report and asking not to be identified because the discussions are private and may not result in an agreement. Softbank, Japan’s third-largest mobile-phone operator, said it isn’t holding discussions to buy Yahoo Japan shares.

Yahoo Japan, the nation’s most-visited web-portal, rose the most in more than four months in Tokyo trading, while Softbank fell. Unwinding the Yahoo Japan stake, which has a market value of more than $7.5 billion, would help Yahoo Chief Executive Officer Carol Bartz generate funds as she eliminates jobs and sheds unsuccessful businesses to drive a turnaround and compete with Facebook Inc. and Google Inc.

“As for Softbank, I doubt if it’s worth paying a big premium on Yahoo Japan shares as Softbank already has the revenue source of mobile phone business and is investing in China businesses,” said Shinji Moriyuki, an analyst at Nikko Cordial Securities Inc. in Tokyo.

The disposal may not be structured as an outright sale to help Yahoo avoid taxes on the proceeds, said the people. Different options include an asset swap or possibly a tracking stock, with an agreement possibly coming within weeks, according to Reuters. A deal hasn’t yet been reached and could fall apart, according to the report.

Denying Talks

“We’re not having discussions on an acquisition of Yahoo Japan shares,” said Takeaki Nukii, a spokesman at the Tokyo-based mobile-phone operator.

Dana Lengkeek, a spokeswoman for Sunnyvale, California-based Yahoo, declined to comment. Chizu Sasaki, a spokeswoman for Yahoo Japan, declined to comment.

Yahoo Japan rose 3.7 percent to close at 32,300 yen in Tokyo trading, the biggest gain since Oct. 14. Softbank fell 3.6 to 3,255 yen.

Yahoo, the most-visited U.S. Web portal, held 35 percent of the Japanese venture as its second-largest shareholder, according to data compiled by Bloomberg. Softbank has a 42 percent stake.

Big Deal

Based on Yahoo Japan’s market value, a deal would result in the biggest sale of a Japanese Internet asset ever, according to data compiled by Bloomberg. In November, Softbank, Japan’s only carrier offering Apple Inc.’s iPhone, announced a 412.5 billion yen ($5 billion) repurchase of securities from Vodafone Group Plc.

Bartz is aiming to make Yahoo more efficient as it competes with Facebook and Google. In January, Yahoo said it was eliminating about 1 percent of its workforce. The company also is pulling back on the amount of services it offers users.

In the U.S., Yahoo plans to shut down some features, including Yahoo! Buzz, a news ranking tool, the company said last year. Bartz has also reduced spending through the 10-year agreement that lets Microsoft Corp. handle search-related technology and the platform that sells search-based ads, called AdCenter.

Softbank’s relation with Yahoo started in 1995 when the Japanese company bought about a 5 percent stake in Yahoo. The following year, the two companies started Yahoo Japan with a joint investment totaling 200 million yen.

To contact the reporters on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net; Serena Saitto in New York at ssaitto@bloomberg.net; Mariko Yasu in Tokyo at myasu@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net; Thomas Giles at tgiles5@bloomberg.net

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