The Blackstone Group and Bain Capital are discussing whether to team up with two major Asia companies in a bid to buy Yahoo for more than $25 billion.
The possibility was floated late Wednesday in media reports that quoted people familiar with the matter who were not identified.
Both Reuters and Bloomberg News said Blackstone and Bain Capital could bid more than $20 per share if they pursue a joint bid with China's Alibaba Group and Japan's Softbank Corp. That would translate into more than $25 billion, based on the 1.24 billion shares that Yahoo had outstanding as of Oct. 31.
Yahoo's stock price hasn't topped $20 during the past three years, mainly because the company's revenue has been slipping as it loses ground in the rapidly growing Internet ad market to Google Inc. and Facebook.
Yahoo and Bain Capital declined to comment Wednesday. Blackstone didn't immediately return phone calls seeking comment.
Although the media reports emphasized nothing has been finalized, the prospect of a takeover bid tantalized investors. Yahoo shares surged more than 6 percent to $16.72 in extended trading.
It's the latest speculation to surface about Yahoo's fate since the Internet company fired Carol Bartz as its CEO in early September. Yahoo's board has been reviewing a possible sale of all or part of the company since then.
The company's nine directors haven't publicly disclosed a timetable for its decision on whether to pursue a deal or pursue a different strategy under a new CEO. Tim Morse, Yahoo's chief financial officer, has been the company's interim leader since Bartz's ouster.
Private equity firms Blackstone and Bain are just one of several potential suitors flirting with Yahoo. Others reported to be interested in at least buying a major stake in Yahoo include Silver Lake Partners, Providence Equity Partners and Kohlberg Kravis Roberts & Co.
Microsoft Corp. also has signed a confidentiality agreement to gain access to Yahoo's books, but the world's largest software maker doesn't appear to be in interested in buying the entire company like it was in 2008. At that time, Microsoft offered as much as $33 per share, or $47.5 billion, before ending the talks in frustration over Yahoo's indecision. This time around, Microsoft's main motive is protecting a 10-year deal it signed in 2009 to provide Yahoo with its search technology.
Alibaba CEO Jack Ma already has publicly said his company is interested in buying Yahoo.
If Alibaba joins in a successful bid for Yahoo, it would represent a turn of the investment tables. Yahoo currently owns a 42 percent stake in Alibaba, an investment it acquired for about $1 billion in 2005. Ma had hoped to buy back Yahoo's stake from Bartz, but couldn't persuade her to sell. The rocky relationship between Ma and Bartz contributed to investors' growing dissatisfaction with her leadership before Yahoo's board ended her 32-month reign.
Softbank also is an investor in Alibaba, which has established itself as one of China's most valuable Internet companies. Some analysts have estimated that Yahoo could sell its stake for more than $10 billion.
By joining in a joint takeover bid, Alibaba would be able to get back the stake it wants from Yahoo and leave the other pieces of the company to be divvied up with its buyout partners. Both Yahoo and Softbank are major shareholders in Yahoo Japan. Wednesday's media reports said Blackstone and Bain are eyeing Yahoo's U.S. operations.