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November 4, 2011 4:53 PM

With Cleary Advising, TPG Inches Toward Possible Yahoo Bid

Posted by Julie Triedman

Update, 11//11, 4:30 p.m. EST: The fifth paragraph of this story has been revised to reflect that Skadden, Arps, Slate, Meagher & Flom is representing Yahoo in connection with the company's ongoing strategic review.

Late Thursday, according to The New York Times's DealBook blog, TPG Capital became the first potential suitor to sign a nondisclosure agreement with Yahoo, allowing the private equity shop to begin due diligence toward possibly making a bid for or taking a minority stake in the once-high-flying Internet company. 

A source close to the process tells The Am Law Daily that TPG has turned to its frequent outside counsel, Cleary Gottlieb Steen & Hamilton, for advice on the matter. The firm declined to comment. As The Am Law Daily reported at the time, Cleary represented TPG in May in its acquisition of Primedia, Inc. TPG's general counsel, Ronald Cami, is a former Cravath, Swaine & Moore partner. 

The Times reports that TPG's move comes as other private equity firms are balking at signing the agreement because its terms include a prohibition on talking with other potential suitors.

Yahoo, which is reportedly considering a range of options for reviving its sagging fortunes, has tapped Goldman Sachs and Allen & Company as its financial advisers for the ongoing strategic review, according to Reuters.

Kenton King, the partner in charge of Skadden, Arps, Slate, Meagher & Flom's Palo Alto office and the global cohead of Skadden's firmwide corporate transactions practices, confirmed that the firm is advising Yahoo in connection with the company's strategic review.  Yahoo general counsel Michael Callahan is a former Skadden associate, and the company has long looked to the firm for transactional advice. Past matters on which Skadden has advised Yahoo include the company's merging of its Chinese subsidiaries with China-based e-commerce business Alibaba Group in 2005, according to sibling publication Corporate Counsel.

Alibaba, which holds a 40 percent stake in Yahoo, is among 15 parties that are reportedly interested in potentially taking some kind of ownership stake in Yahoo, according to a tally by the Financial Times. Others on the list of potential contenders: online rivals AOL Inc., Google Inc., and Microsoft Corporation; sovereign wealth fund Temasek Holdings Limited; and multiple private equity investors, including Bain Capital, The Blackstone Group, The Carlyle Group, KKR & Co., Providence Equity Partners, and Silver Lake.

With uncertainty hovering over its future, Yahoo has remained in the thick of the deal fray. In September, Willkie Farr & Gallagher advised the hedge fund Third Point on taking a 5.2 percent stake in Yahoo amid speculation the company had become a takeover target. On Tuesday, Yahoo announced that, with Latham & Watkins and Morrison & Foerster advising, it had made an acquisition of its own by spending $270 million for online advertising company Interclick, Inc. Greenberg Traurig and Sichenzia Ross Friedman Ference are advising Interclick on the deal.

Sara Randazzo contributed reporting.

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