Daily Management Review

$3 Billion to be Bid by Verizon for Yahoo’s Web Assets: WSJ


06/07/2016




$3 Billion to be Bid by Verizon for Yahoo’s Web Assets: WSJ
A second-round bid of about $3 billion for Yahoo  Inc.’s core internet business is being planned by Verizon Communications, reports the Wall Street Journal citing a person familiar with the matter.
 
It was expected that the Monday’s deadline for the second round of bids would be met by the telecom company which was seen as the leading contender to buy Yahoo. However, people familiar with the matter have told the Wall Street Journal that the offers could change by the final round as Yahoo is expected to hold at least one more cycle of bidding.
 
There were no comments from Verizon and Yahoo spokespersons.
 
One of the sources that the Wall Street Journal spoke to said that as a part of the deal, certain Yahoo assets, such as patents and real estate were not on the acquiring list of Verizon as has been indicated by the company. The sale of non-core assets, including real estate and patents, could fetch Yahoo more than $1 billion and the company has been exploring sale options.
 
According to a person familiar with the matter a second-round bid before the deadline was expected to be submitted by private-equity firm TPG as of late Monday. It is however not yet clear whether new bids were submitted by the other suitors that previously participated in the auction. Apart from a group led by Quicken Loans founder Dan Gilbert, private-equity firms Advent International and Vista Equity Partners had taken part in the previous bid. It is possible that the proposals would be structured differently and that not everyone will bid for all of the core business.
 
Market analysts expected bid of about $2 billion to $3 billion in the second round from Verizon and other potential suitors, the Wall Street Journal had reported last month. As recently as April, people close to the process said Yahoo’s core business likely would go for between $4 billion and $8 billion and the expected bids placed were certainly lower than the price Yahoo’s web properties were expected to fetch.
 
According to various sources, after last month’s sale presentations by Yahoo Chief Executive Marissa Mayer at the company’s Sunnyvale, Calif., headquarters, some bidders were less enthusiastic about doing a deal. The sources said that the extent to which Yahoo’s online advertising business is declining were revealed in those presentations.
 
The clearest path to turning around Yahoo has been accorded to Verizon which acquired AOL Inc. last year for $4.4 billion. The growing business in online ads of the telecom giant is likely to be combined with Yahoo’s web properties that together attract more than a billion users a month. That would enable Verizon to offer more than at least some other bidders.
 
The sources said that a few lingering questions about the deal would form the base for the payment that Verizon was willing to pay Yahoo at the time of submitting the bid. For example, if Yahoo agreed to help cover the cost of employee severance payments for any workers cut as a result of the acquisition, Verizon would likely pay a higher price, the person said.

The stakes of Yahoo in Alibaba Group Holding Ltd. and Yahoo Japan comprise the bulk of Yahoo’s roughly $35 billion market capitalization.
 
(Source:ww.wsj.com) 






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