Verizon Communications Ahead in Bid to Buy Yahoo! Assets

Verizon Communications

Verizon Communications Inc. (NYSE:VZ) recently received a big confidential boost in its bid to buy Yahoo!’s core business which is up for sale at the moment. Several rival suitors who also wanted to make bids decided not to make any which leaves Verizon as the front-runner in the bidding process.

The bidding process, which is scheduled to start on Monday, Verizon was part of the companies which were moving forward with the bidding process, compared to the 40 firms which had shown interest to buy Yahoo’s core business, according to sources familiar with the story.

One of the forfeiting suitors in the process is Time Inc. The company said the process of righting Yahoo’s fortunes back to normal would be too much of a problem and a degree too high for the company, sources close to the company said.

Sources close to the matter also said other non-bidders of the company include, the most valuable company on earth and parent company to Google, Alphabet Inc., Comcast Corp., AT&T Inc., and Barry Diller’s IAC/InterActiveCorp.

Verizon interest to buy Yahoo!

Verizon definitely has the assets to buy Yahoo and integrate the struggling Yahoo core business. The company has a market cap of $210 billion and has $4.5 billion in cash reserves on its balance sheet. The company can also integrate the company just as they did the AOL business properties for $4.4 billion last year.

Verizon plans on growing its video services and online advertising as the next growth engine. Verizon plans to make online advertising platform that can compete with Internet giants such as Facebook and Google. The company plans to combine customer data from smartphones they give service to and advertising inventory on AOL and Yahoo.

“Verizon is trying to pivot its business from analog to digital. Verizon believes that a combined AOL/Yahoo would provide the digital advertising platform they need to execute their video reinvention strategy,” according to Craig Moffett, senior analyst at MoffettNathanson, a telecommunications research firm.

Verizon’s position is likely to be at threat from private equity firms, now that most potential suitors have left the bidding process. Bain Capital, TVG, and Advent International are some of the buyout firms interested in bidding to buy Yahoo, according to sources.

British’s Daily Mail & General Trust was still looking for bid partners while KKR & Co is also said to have interest but it was unsure whether they would make a bid.

Yahoo’s core business might fetch anything between $4 billion and $8 billion, though, with the recent travails that the firm is going through, it is yet unclear what the business might be up for.