Time Magazine Inc

Time Inc (NYSE:TIME) has been considering a proposal to purchase the core internet business of Yahoo! Inc. (NASDAQ:YAHOO) for several weeks, according to Reuters based on information familiar with the situation.

Time is the publisher of People, Sports Illustrated and Time magazine. Yahoo’s core internet business includes its search, mail, and news sites.

Last week, Yahoo announced that it created an Independent Committee to explore strategic alternatives including a sale of its core internet business as it continues to consider its planned reverse spinoff.

Time could pursue a Reverse Morris Trust deal with Yahoo

The sources said Time has been contacting bankers regarding its intention to pursue a transaction with Yahoo. It is uncertain whether the magazine publisher already engaged the services of an investment bank to become its financial advisor on a potential offer for the technology company’s internet core business.

A related report from Bloomberg suggested that Time could pursue a Reverse Morris Trust transaction with Yahoo. Such deal means CEO Marissa Mayer will not be part of the company, according to the media entity citing one of its sources.

The report also indicated that Time heard a presentation from banker at Citigroup (NYSE: C) on pursuing a merger deal with Yahoo. Time CEO Joe Ripp was interested in the idea, according to the sources who requested anonymity because the information is private. The magazine publisher did not retain the Citigroup as financial advisor.

Other companies interested in Yahoo’s internet core business

Time will be competing with other companies interested in acquiring Yahoo’s internet core business including Verizon Communications Inc (NYSE: VZ) and AT&T Inc (NYSE: T).

Market observers suggested that Time appears to an underdog in the competition to pursue a deal with Yahoo. The magazine publisher is pursuing acquisitions of online properties to boost its digital presence. Earlier this month, Time announced its decision to purchase MySpace, and Viant, an advertising firm,

The magazine publisher also reported that its profit fell more than expected during the fourth quarter. The company was negatively impacted by a strong dollar and a decline in income from print ads. The company estimated that its advertising revenue would be flat or it might drop for the current quarter.

Earlier this month, the magazine publisher reported a bigger-than expected drop in fourth-quarter profit, hobbled by a strong dollar and a drop in income from print ads, and said ad revenue would likely be flat or fall in the current quarter.

The stock price of Time declined 2.58% to $13.97 per share at the time of this writing around 12:21 in the afternoon in New York on Tuesday, February 23.

Sources: Reuters, Bloomberg