AT&T Inc. and Verizon Communications, which are two major US telecommunication companies, will be competing in the third round of bidding for Yahoo Inc.’s core internet assets. Verizon’s bid for the second round was at the low end of $3.5 billion to $5 billion, which gives better prospects for AT&T. Other lead players in the bid are Quicken Loans Inc. and Berkshire Hathaway Inc.
TPG Capital and a consortium of Bain Capital Private Equity and Vista Equity Partners Management also made offers for the deal. Some firms, however, dropped out of the bid, due to the concern whether Yahoo’s internet assets would be viable as a standalone business. Yahoo, Verizon, and AT&T, have declined to give more comments about the matter though. Since the details of the bid are confidential, sources do not wish to be named.
Verizon’s main interest is in Yahoo’s advertising technology tools. The company has been studying how other assets for sale such as search, mail, and messenger services, could be combined with the corresponding businesses of AOL, which Verizon attained for $4.4 billion recently.
AT&T, on the other hand, is trying to catch up with Verizon in advertising technology by expanding in its mobile video offerings. It is working with an investment bank on its bid.
According to reports, “A sale of Yahoo’s internet assets would leave the company just owning a 35.5 percent stake in Yahoo Japan, as well as its 15 percent stake in Chinese e-commerce company Alibaba Group Holding Ltd., which accounts for most of its value.”
Yahoo decided to sell its assets in December 2015 when the company’s board started to evaluate selling its many online properties to private equity firms. They were also put under great pressure from activist hedge fund Starboard Value LP, which led Yahoo to the point of selling its assets.
The current auction process was initiated in February when Yahoo cancelled plans to spin-off its stake in Alibaba. This happened because investors were worried whether that transaction could have been carried out on a tax-free basis. The company started taking bids in April. Yahoo hopes to conclude the auction by next month.