Verizon intends to bid for Yahoo's web business next week, according to a Bloomberg report, and Google is considering making an offer as well. But AT&T is out of the running.
Citing unnamed "people familiar with the matter," Bloomberg said the first round of bidding for Yahoo's online assets will begin this Monday. Verizon and its subsidiary AOL are said to be working with at least three financial advisors about the move, which signals the carrier's seriousness.
The nation's two largest mobile network operators have long been rumored to be eyeing a takeover of some of Yahoo's assets, and both have worked aggressively over the last year to move into media and advertising. Verizon executives have said several times the company was taking a hard look at Yahoo.
Bloomberg reported in January that Verizon had put Tim Armstrong, CEO of the new AOL unit, in charge of researching a possible bid.
Yahoo would much prefer to package its 35.5 percent stake in Yahoo Japan, which is worth roughly $8.5 billion, in any deal. Surprisingly, Verizon is willing to acquire that stake to bolster its offer, then could give it to shareholders or sell it separately.
Barclays said several weeks ago that a Verizon purchase of Yahoo properties is "not inconceivable," noting the carrier's recent acquisitions including AOL and the mobile ad firm Millennial Media. Those deals "have all largely focused on building out (Verizon's) tool set in order to create new revenue opportunities that sit on top of the network," the firm observed.
Indeed, Yahoo's web assets are a good fit for Verizon, which is looking to leverage media properties such as AOL's Huffington Post, Engadget and TechCrunch, as well as its Go90 video offering. The carrier's subscriber base provides a massive distribution channel that can be used immediately, providing a way to further monetize subscribers. And Yahoo's high-profile brand and large audience opens the door for Verizon to ramp up its OTT efforts.
Whether Verizon could fully capitalize on Yahoo's assets, though, is another matter. Mobile carriers historically have failed to monetize apps and content effectively, giving rise to the OS-based empires of Apple and Google.
"Based on our further digging into the matter our takeaway is that a potential acquisition of Yahoo seems to fit in line with what Verizon is trying to accomplish strategically," Barclays wrote recently. "This doesn't mean we are endorsing a transaction or its strategy -- we think the company will need to provide better visibility on how all of its new initiatives will contribute to earnings growth."
- see this Bloomberg report
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