The deadline for bids for Yahoo’s core business was yesterday (Apr. 18), with Verizon topping the list of potential buyers, competing with bids from TPG, the San Francisco-based private equity firm; and YP Holdings, the digital advertising business that was formerly YellowPages.com.
Big names previously linked to a bid, including Time Inc, Microsoft, Alphabet, Comcast, AT&T, and IAC/InterActiveCorp, haven’t submitted one, according to reports, somewhat improving Verizon’s prospects.
Confirmation of Verizon’s bid, as well as offers from TPG and YP Holdings, was reported by Bloomberg today (Apr. 19), citing unnamed sources close to the private process. Verizon is thought to be after Yahoo’s web traffic in order to build a video advertising business. The carrier already owns AOL, acquired for $4.4 billion last May, which is at the core of its plan to develop media and advertising assets.
For YP Holdings, a Yahoo deal would be a coup. The company, valued at up to $1.5 billion, is majority owned by private equity firm Cerberus Capital Management, with AT&T owning the rest. Its small size would qualify it to use a tax-free mechanism for merging with Yahoo, making its participation in the deal plausible, according to Bloomberg.
The field of potential buyers was widely reported to stand at 40, but the figure dwindled as the deadline loomed. Time Inc. reportedly abandoned the idea of making an offer for Yahoo because they thought the business was simply too difficult to save, according to The Wall Street Journal (paywall).
It’s still unknown whether the Daily Mail & General Trust, publisher of the British tabloid the Daily Mail, submitted a bid. It had publicly expressed interest in the company and was still negotiating partnership terms with private equity firms as the deadline drew closer, The Wall Street Journal reported. If the Daily Mail successfully acquired Yahoo, it could provide an additional 1 billion readers to the Mail’s trademark brand of incendiary tabloid journalism.
Yahoo is valued at roughly $34.6 billion, and its core business could fetch between $4 and $8 billion in an auction (paywall), The Wall Street Journal estimated. Buyers have been reportedly asked to specify which assets they would be interested in acquiring and at what price, including Yahoo’s core web business, and its stakes in Alibaba and Yahoo Japan.
Yahoo extended its deadline for preliminary bids by a week, to coincide with the release of its first-quarter earnings. A number of events could still upset any acquisition or merger, including a proxy battle by activist investor Starboard Value that could replace Yahoo’s board of directors; and the fact that Yahoo might still be trying to fix its business internally in the hopes of stymying a sale.