Buffett Supports a Consortium Bidding for Yahoo! Inc. (YHOO)

Warren Buffet Fortune
Credit: Fortune Live Media @Flickr

Warren Buffett, the Chairman and CEO of Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B), is supporting a consortium of investors bidding for the internet assets of Yahoo! Inc. (NASDAQ:YHOO), according to Reuters based on sources familiar with the situation.

The report indicated that the investors’ group included Dan Gilbert, the founder of Quicken Loans. Yahoo’s bidding process for its internet assets is now in the second round.

A challenge to Verizon’s bid for Yahoo’s internet assets

Buffet is helping finance the offer to Yahoo, according to the sources. Market observers suggest that Buffett and Gilbert’s interest is a boost for the technology company. They also perceived it as a challenge to the bid of Verizon Communications (NYSE:VZ), which acquired AOL for $4.4 billion last year.

Yahoo has a short list of around ten bidders for its assets.  Most of the interested buyers are private equity firms including a consortium led by Bain Capital and Vista Equity Partners. The offers range from $4 billion to $8 billion, according to people familiar with the matter.

Buffett believes Yahoo business needs a change

During a recent interview with CNBC, Buffett commented that Yahoo’s business deteriorated significantly and “something has to change” within the company. The billionaire investor did not mention any interest on a potential offer for the internet assets of the technology company.

Last month, Buffett also acknowledged that Berkshire Hathaway had been slow in new technology when it comes to its investments.

It is interesting to note that Yahoo’s web portal broadcasted Berkshire Hathaway’s annual shareholder meeting for the first time this year.

Susan Decker, a member of the Board of Berkshire Hathaway and a former chief financial offer and president at Yahoo told CNBC last month, “I hope the next owner can do something to revitalize the spirit of the core things that made Yahoo very, very unique and create a distinction in consumers’ minds about why they love Yahoo still. It will be helpful if it is private or part of a much larger corporation to achieve that.”

Last month, Yahoo reached an agreement with Starboard Value to prevent a proxy fight. The technology company agreed to four independent directors to its Board including Starboard CEO Jeffrey Smith.

Starboard owns 1.7% stake in Yahoo and has been pushing for significant changes in the leadership, execution, and strategy of the company to drive growth.