American telecommunication giant Verizon seems to be inching closer to buying core internet business (news sites and ads business) of Yahoo Inc. According to a new report in the Wall Street Journal, Verizon will submit a bid of $3 billion in the second round of bidding towards the sale of Yahoo’s core assets.
Verizon is expected to submit an offer next week whereas another private equity firm TPG is also reportedly planning to submit a bid. The report says that Yahoo could hold another round of bidding before it finalises the deal with one company.
When reports of Yahoo officially going on sale first transpired, names of several popular companies emerged as the potential buyers. These included some pretty big-time players like — Google’s parent company Alphabet, Microsoft, Time Inc., AT&T, Comcast and IAC/InterActive Corp.).
However, most names backed out from the bidding process and Verizon emerged as the strongest contender after the first round of bidding. Along with Verizon, Japanese online retailer Rakuten Inc, YP Holdings and private equity firms Apax Partners, TPG Capital LP, Bain Capital, Apollo Global Management and Warburg Pincus also submitted bids in the first round.
According to various experts, Verizon is particularly keen on buying Yahoo for boosting its digital advertising business with the help of Yahoo’s media platforms and news services such as email, photo-sharing, etc.
Moreover, despite a sharp decline in its popularity over past few years, Yahoo still commands a regular user base of one billion users which would further help the telecommunication company.
For the same goal of reinventing itself into a digital advertising platform, Verizon had made two key acquisitions last year — one of AOL for $4.4 billion and the other of ad tech firm Millennial Media for about $250 million.
The company reportedly plans to take advantage of online advertising through combined assets of AOL (Huffington Post and TechCrunch) and Yahoo (Yahoo Finance and Yahoo Sports).
However, the speculated $3 billion bid for Yahoo’s Internet business by Verizon falls short of the initial bids of $4 billion to $8 billion which was decided during initial bid cycle. In fact, a CNBC analyst has even claimed that it is “lower than the lowest bids” which Yahoo has received.
As per WSJ, this is because of a sales presentation given by Marissa Mayer last month which showed that the online business of Yahoo ,which is being eyed by Verizon, was slowing down. And hence, Verizon bid seems to be way lower than it was expected.