Verizon reportedly the front-runner for Yahoo acquisition

(Reuters)  – Yahoo is focusing on U.S. telecommunications company Verizon as the  buyer of its core business after reviewing final bids that it received  this week, people familiar with the matter said on Friday. A deal would boost Verizon’s AOL internet business, which the company  acquired last year for $4.4 billion, by giving it access to Yahoo’s  advertising technology tools, as well other assets such as search, mail,  messenger and real estate. These synergies have made Verizon the  favorite among industry analysts to prevail in the auction. The sale would also mark the end of Yahoo as an operating company,  leaving it only as the owner of a 35.5 percent stake in Yahoo Japan, as  well as its 15 percent interest in Chinese e-commerce company Alibaba  Group Holding Ltd <BABA.N>. Those two stakes account for most of  Yahoo’s $37 billion market capitalization. Yahoo views Verizon as the buyer that can deliver the most value, but  negotiations between the two companies are continuing, and no agreement  has yet been reached, the sources said. Yahoowould like to have a deal  for the core assets by the end of July, one of the sources added. Bloomberg News, which reported earlier that Verizon was nearing an  agreement to buy the Yahooassets, cited an anonymous source as saying  the companies were discussing a price close to $5 billion. Yahoo shares  were up 0.6 percent at $39.09 in morning trading, while Verizon rose 1.3  percent to $56.09. The sources requested anonymity because the negotiations are  confidential. Verizon and Yahoodid not respond to requests for comment. “Verizon has always been the favorite because it has the largest  potential synergies and therefore can pay the most,” said Erik Gordon, a  professor at the University of Michigan’s Ross School of Business. “The  price negotiations still can be tough because it also doesn’t need  Yahoo. It can put its money into its AOL franchise.” Verizon is already working on increasing revenue through its go90  ad-supported mobile video service targeted at millennials. The app,  which was introduced in October, offers videos from Comedy Central, Vice  and other programmers, as well as basketball and football games. Other bidders for the Yahoo assets include Verizon rival AT&T; a  consortium led by Quicken Loans founder Dan Gilbert and backed by  billionaire Warren Buffett; private equity firm TPG Capital LP; and a  consortium of buyout firms Vector Capital and Sycamore Partners, sources  have said previously. AOL Chief Executive Officer Tim Armstrong, who made his name leading  sales at Google, is highly regarded in the advertising community.  Analysts say it is unlikely that Yahoo CEO Marissa Mayer, another former  Google high-flyer who has struggled to turn her internet company  around, would join him at AOL. 

Losing ground to competitors

In December, Yahoo scrapped plans to spin off its Alibaba stake after  investors fretted over whether that transaction could have been carried  out on a tax-free basis. It instead decided to explore a sale of its  core assets, spurred on by activist hedge fund Starboard Value LP. Yahoo said in April that Starboard CEO Jeffrey Smith and three  independent directors associated with him would join its board  immediately. All four were on a slate that Starboard had proposed to  oust Yahoo’s entire board. Started in 1994 by Stanford graduate students Jerry Yang and David  Filo, Yahoo in its early years was the destination of choice for many  making their first forays into the World Wide Web. The company soared  and then crashed in the first dot-com bubble before emerging as one of  the few internet companies with substantial revenues and profits. By 2008, Yahoo was fending off a contentious takeover bid from Microsoft and struggling to define its mission. That question was never really answered, leading to years of  management instability and shifting priorities. Google, Facebook, Amazon  and a host of new companies, meanwhile, claimed much of the territory  that might have been Yahoo’s. (Reporting by Greg Roumeliotis in New York and Liana B. Baker in  San Francisco; Additional reporting by Malathi Nayak in New York;  Editing by Lisa Von Ahn) 

Source : http://venturebeat.com/2016/07/22/verizon-reportedly-the-front-runner-for-yahoo-acquisition/