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Did Verizon Submit a Second-Round Bid for Yahoo for $3B?
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According to a recent report by The Wall Street Journal, U.S. telecom behemoth Verizon Communications Inc. (VZ - Free Report) had planned to submit a $3 billion bid in the second round to acquire the core Internet-based assets of Yahoo! Inc. . Monday was the deadline for submitting the second round of bidding. Yahoo is likely to conduct at least one more round of bidding and the final offers could change from the initial bids.
Yahoo has reportedly received more than 10 initial bids. Apart from Verizon, other notable bidders included private equity firm TPG Capital LP and Yellow Pages owner YP LLC. Recently, AT&T Inc. (T - Free Report) , which controls YP LLC, directly entered the bidding process for Yahoo’s core assets. This led YP LLC to withdraw its bid. The Wall Street Journal stated that TPG Capital LP has in all likelihood submitted a second round of bid for Yahoo.
At present, Verizon appears to be best suited to merge Yahoo into its online platform. Internet-based information service provider giant Yahoo is currently struggling with its core businesses namely mail service, online sports, financial and general news sections and its vital online advertising technology, which includes the video advertising platform, BrightRoll.
In Feb 2016, Yahoo disclosed that it would consider "strategic alternatives" for its core businesses, including an outright sale or a spin-off. Notably, Yahoo boasts a significant user base that trails only Google of Alphabet Inc. (GOOGL - Free Report) and Facebook Inc. . Yahoo was initially expecting to collect $4 billion to $8 billion from the sale of its core Internet-based products.
However, Verizon’s bid of $3 billion is much less than the anticipated amount. The reason may be the dwindling business of Yahoo. According to the research firm eMarketer Inc., this year Yahoo will control just 1.5% of the overall digital advertising market, down from 2.1% in 2015. Yahoo is expecting the sale of its non-core businesses like real estates and patents to fetch around $1 billion.
The core businesses of Yahoo perfectly complement Verizon’s focus areas. In Oct 2015, Verizon launched its ad-supported mobile video service Go90 targeting the younger generation. To derive maximum benefits from its mobile video platform, in Jun 2015, the company took over AOL Inc. that provides advertising technology enabling automated buying and selling of ads online.
At present, Yahoo has more than 1 billion users for its e-mail, finance, sports and video sites, AOL has 2 million users and Verizon commands over 112 million wireless subscribers. Verizon is currently focusing on online content delivery, mobile video and online advertising for future growth. These businesses have the potential to generate significant revenues for the company, especially given that its legacy telecom business is presently facing serious pricing competition. According to eMarketer, the global mobile ad market value is expected to reach $133.7 billion by 2017.
Verizon currently carries a Zacks Rank #3 (Hold).
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Did Verizon Submit a Second-Round Bid for Yahoo for $3B?
According to a recent report by The Wall Street Journal, U.S. telecom behemoth Verizon Communications Inc. (VZ - Free Report) had planned to submit a $3 billion bid in the second round to acquire the core Internet-based assets of Yahoo! Inc. . Monday was the deadline for submitting the second round of bidding. Yahoo is likely to conduct at least one more round of bidding and the final offers could change from the initial bids.
Yahoo has reportedly received more than 10 initial bids. Apart from Verizon, other notable bidders included private equity firm TPG Capital LP and Yellow Pages owner YP LLC. Recently, AT&T Inc. (T - Free Report) , which controls YP LLC, directly entered the bidding process for Yahoo’s core assets. This led YP LLC to withdraw its bid. The Wall Street Journal stated that TPG Capital LP has in all likelihood submitted a second round of bid for Yahoo.
At present, Verizon appears to be best suited to merge Yahoo into its online platform. Internet-based information service provider giant Yahoo is currently struggling with its core businesses namely mail service, online sports, financial and general news sections and its vital online advertising technology, which includes the video advertising platform, BrightRoll.
In Feb 2016, Yahoo disclosed that it would consider "strategic alternatives" for its core businesses, including an outright sale or a spin-off. Notably, Yahoo boasts a significant user base that trails only Google of Alphabet Inc. (GOOGL - Free Report) and Facebook Inc. . Yahoo was initially expecting to collect $4 billion to $8 billion from the sale of its core Internet-based products.
However, Verizon’s bid of $3 billion is much less than the anticipated amount. The reason may be the dwindling business of Yahoo. According to the research firm eMarketer Inc., this year Yahoo will control just 1.5% of the overall digital advertising market, down from 2.1% in 2015. Yahoo is expecting the sale of its non-core businesses like real estates and patents to fetch around $1 billion.
The core businesses of Yahoo perfectly complement Verizon’s focus areas. In Oct 2015, Verizon launched its ad-supported mobile video service Go90 targeting the younger generation. To derive maximum benefits from its mobile video platform, in Jun 2015, the company took over AOL Inc. that provides advertising technology enabling automated buying and selling of ads online.
At present, Yahoo has more than 1 billion users for its e-mail, finance, sports and video sites, AOL has 2 million users and Verizon commands over 112 million wireless subscribers. Verizon is currently focusing on online content delivery, mobile video and online advertising for future growth. These businesses have the potential to generate significant revenues for the company, especially given that its legacy telecom business is presently facing serious pricing competition. According to eMarketer, the global mobile ad market value is expected to reach $133.7 billion by 2017.
Verizon currently carries a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>