Verizon to submit bid for Yahoo
Fri 8 Apr 2016
Sources close to the company have confirmed that Verizon will submit a first-round bid to purchase Yahoo’s web business early next week, and that they may offer to take on Yahoo Japan as well. Time Inc. and Google are said to still be considering whether or not to make an offer, while AT&T, Comcast, and Microsoft have decided against entering a bid.
Verizon’s willingness to take on Yahoo Japan in the bid may give it a strategic advantage over other bidders. The combined value of Yahoo web and Yahoo Japan Corp. could put the value of the bid out of range for all but the largest investors, potentially putting interested private equity firms such as Bain or TPG out of the running.
Yahoo had originally marked April 11 as the deadline for first-round bids for their web business in an auction launched in March. Yesterday, they decided to extend the deadline to April 18. Website re/code claimed to have access to financial disclosure documents that Yahoo released to potential bidders. The 2016 projections outlined in the documents showed a potential 15% drop in revenue and an over 20% loss in earnings. These dire financial predictions stem from a loss of ad revenue to rivals at Google and Facebook as well as changes in assets, including a $230 million devaluation of Tumblr, acquired by Yahoo in 2013 for almost $1 billion.
Verizon CEO Lowell McAdam expressed an interest in bidding on Yahoo as far back as December 2015, saying that Yahoo could be tailored to enhance its AOL business. His determination to put the combined business under the control of AOL, however, may very well leave current Yahoo CEO Marissa Meyer out in the cold. “We have to understand the trends that we are seeing in some of their results now. But then, at the right price I think marrying up some of their assets with AOL under Tim Armstrong’s leadership would be a good thing for investors.”