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Verizon on the verge of a $5 Billion Yahoo acquisition : reports

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After months of discussions and debates over who would actually buy it, Yahoo’s embarrassment may be at an end. According to news coming in from various sources, Verizon, may be about to seal the deal on the fate of Yahoo’s core business assets.

The deal which is expected to involve around $5 Billion on Verizon’s part, will leave the telecom giant in possession of Yahoo’s search, content, mobile and advertising businesses.

The company had been one of the forerunners in the race to buy out the once-internet-giant’s core business assets. However, recent rumors coming in from various sources now suggests that it has actually reached an agreement with Yahoo, leaving only an official announcement with the details to be desired. Meanwhile, representatives of both the companies have declined to comment on the topic.

The deal will of course, mark the end of Yahoo as we know it, however that shouldn’t really be cause for much consternation and surprise. Despite CEO Merissa Meyer’s best efforts, Yahoo was a sinking ship where the next top executives was leaving before the first had finished moving his stuff out of the office. With conditions as bad as this, selling out for the best possible offer had a definite appeal from the shareholder’s perspective.

Verizon, AT&T  and an investing group that was backed by Quicken Loans founder Dan Gilbert were all said to be serious bidders, although the list had also included Private equity firms General Atlantic, TPG and KKR, Tech giants Google and Microsoft, and Media companies, such as the Daily Mail and Time Inc at one time. The great variety of fields the candidates interested in buying Yahoo belonged to, was merely mirroring the different businesses Yahoo itself operates in — perhaps not too successfully.

It is quite sad actually. At a point of time back in 2000, Yahoo was valued at over $255 Billion. While most of it’s contemporaries have managed to multiply their values several times over, Yahoo has, simply put, gone bust. The dot com bubble, Yahoo’s extreme optimism towards the Internet, self harming policies, a preference for the retro and a refusal to keep pace with the current days trends, have all led to this. Merissa Meyer did try to turn things around — battling the shareholders pressure for an early sellout — when she took over back in 2012, however, it was too late and too little.

Verizon is probably hoping to merge Yahoo with AOL, which it acquired last year for $4.4 billion in a bid to diversify its business offerings out of just telecommunications. The company is slated to report its earnings next week on Tuesday, so it may have decided to hold the the Yahoo acquisition announcement until then as well. Meanwhile, Tim Armstrong, the CEO of AOL, is widely expected to take over Yahoo’s reins from Meyer if it does become a part of Verizon.

Roger Entner, an analyst with Recon Analytics LLC, told Bloomberg that,

The buyer that could make the most out of these assets has apparently won. No one could get more out of Yahoo’s businesses than Verizon.

Adding that,

This will expand Verizon’s advertising base by 200 million more visitors and will be a large driver of the advertising engine. They also can collect a whole lot more user data to make the ads more relevant. 

While Yahoo is no longer what it was, its desktop and mobile websites still attract more than one billion monthly active users.

Meanwhile, Meyer is almost certain to leave the company she tried so hard to turn around, albeit unsuccessfully. Her statement to shareholders while on a conference call this week may also be taken as indications of some huge change at the erstwhile internet major.

We set forth a plan to return this iconic company to growth over multiple years, one that would create long-term sustainable growth for Yahoo and deliver value to our users, advertisers, employees and shareholders.  As we work to conclude the strategic alternatives process, this groundwork will serve as a solid foundation for Yahoo!’s next chapter.

Where the next chapter may well be in Verizon’s book. The $5 billion price meanwhile, if accurate, suggests that Verizon is taking over most of Yahoo’s core internet offerings, obviously excluding the Alibaba portion the latter had once purchased as an afterthought and that is now worth much more than its parent. Its unclear if the company’s “Excalibur” patent portfolio –which contains over 2,600 technical patents and is valued at around $1 Billion by Yahoo — is part of the deal. The deal may include some, or all of the erstwhile internet giant’s real estate holdings as well.

Following the news, Yahoo stocks, which have already gained around 18 percent this year, jumped up by another 0.9 percent to reach $39.21. Well, although the rumor mill is literally abuzz with the upcoming acquisition that will mark the end of one of the longest running internet companies, nothing has been officially announced yet. We will keep you updated if there is any word from Yahoo or Verizon or anyone else regarding the deal. Until then, stay tuned!

A bibliophile and a business enthusiast.

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