American Home Mortgage Buyout – AOL Yahoo Buyout Talks Are Just Rumors

Douglas Holtz-Eakin on John McCain “Race to the White House” 6:47pm Interview TRANSCRIPT: DOUGLAS HOLTZ-EAKIN: We think that the right thing to do is to number one, take a crack at putting some of the resources that congress has already devoted to this task, basically almost trillion at this point, and put that money straight into homeownership. Make sure people stay in their homes. And by solidifying the value of some of these mortgages that’s would otherwise go into default, you solidify the evaluation of the MBSs, and that has been a huge cancer on the balance sheets. [] HOLTZ-EAKIN: [] a homeowner could raise their hand, basically go to a mortgage originator or broker, and say, look, I need a refinance out of this McCain resurgence plan. the government would go in and buy out the existing mortgage that takes that problem off the table entirely. Its value is no longer a mystery. Its weight no longer bearing down on the homeowner. [] DYLAN RATIGAN: You realize that’s trillion. We dont know [] how much that problem will cost American taxpayers []. HOLTZ-EAKIN: We know that we’ve already devoted resources at the federal level. We think that those resources ought to go to American home owners and solve the financial stability problems that are clearly evident. The Fed,I think, did a remarkable job last night. And senator McCain applauded their move. But, these are all reactionary steps. We need to get ahead of this. This problem began in the housing finance LABEL: DH

AOL Yahoo Buyout Talks Are Just Rumors

CNBC reported late yesterday that Yahoo was on the Auction block amid rumors about AOL teaming with private capital to buyout the Internet giant. Looks like those rumors were unfounded according to a New York Times article, but they did have a positive effect on Yahoo’s stock price in aftermarket trading yesterday.

The deal chatter Thursday morning is centering on reports by All Things D and The Wall Street Journal that buyout firms are contemplating teaming up with AOL or the News Corporation to buy Yahoo. (Shares in Yahoo jumped nearly 15.8 percent in after-hours trading to .25.)

But hold on a moment: A deal is not happening anytime soon.

The trial balloon in the press is coming from a handful of bankers and investors who have tried to gin up interest in a deal for months. And at least a few of the named “suitors” in the Journal’s story, like the Blackstone Group, have already passed on the idea.

More importantly, Yahoo first heard about the rumors from the press and its own bankers at Goldman Sachs, according to people close to the company.

That doesn’t mean bankers haven’t been running the numbers.

And companies like AOL and the private equity firm Silver Lake are intrigued with the idea. AOL’s chief executive, Tim Armstrong, would love to find a way to merge both companies to generate more scale in the display advertising business.

But making a deal work would require fancy footwork and risk. AOL’s market value is about billion, while Yahoo’s is now about billion — before a premium.

The back-of-the-envelope math requires that Yahoo sell its 39 percent stake in Alibaba, considered one of the company’s biggest and most desirable assets, which could be worth billion. That would put Yahoo closer to a more-reasonable billion, again before a premium.

But Yahoo believes that Alibaba will fetch more in a public spinoff down the road than in a sale now, so why sell now? And while Alibaba would love to buy out Yahoo’s stake in itself, such a move would require the Chinese Internet company to raise yet more capital, raising the potential price of a deal. (The two sides ended the most recent round of talks in June.)

Don’t forget as well that Yahoo’s chief executive, Carol Bartz, believes she can turn around the company — as long as she’s given some more time.

It’s possible that the emergence of the reports will prod a sale process along, at some point down the road. But for the moment, talk of a deal is still pie-in-the-sky.

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American Home Mortgage Buyout

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Thursday, December 8th, 2011 mortgage

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