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Verizon seen as bidder to beat for Yahoo


 
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Verizon seen as bidder to beat for Yahoo
 

 
As the sale of Yahoo's Web a.ssets enters the second stage, one name consistently comes up as the pivotal player: Verizon.

The telecommunications giant, which reports quarterly results early Thursday, had made known its interest in Yahoo's Internet business two months before CEO Marissa Mayer and Chairman Maynard Webb officially announced last month that the company would listen to potential buyers.

Verizon acquired AOL in May 2015 for $4.4 billion. It seems like a good fit because it has the means, the track record, and the motive. Yahoo's online advertising and video content would bolster Verizon's own, analysts say.

Verizon has "been very acquisition-driven lately in ad tech, so it does make a lot of sense in that respect," said Dave McIninch, chief revenue officer of Montreal-based Acquisio, which like other firms in the advertising technology space, has been watching reports of the bidding for Yahoo's parts avidly.

McInich, who is not directly involved in the bidding process, said he expected perhaps two other "chase rabbits" to compare with Verizon's bid "that will allow them to negotiate with some sort of leverage against the suitor they think is the best fit."

"I do think it's essentially Verizon against private equity," he said.

Yahoo also may be more receptive to a corporate, rather than private equity, buyer. Mayer said in Yahoo's earnings call late Tuesday that, in her personal view, the "right transaction" could realize "strategic synergies."

Yahoo (YHOO) shares rallied 4% Wednesday to $37.84, a day after news reports on the first-round bidders emerged. Verizon (VZ) ended down 0.6% to $51.75.

"We believe Verizon likely can pay the most given the potential synergies," wrote Suntrust Robinson Humphrey analyst Robert Peck in a note to investors Wednesday.

Another factor that may grease the wheels of a Verizon bid: both Mayer and Tim Armstrong, CEO of Verizon's AOL business, are former executives at Google.

Verizon and several private equity firms are among the companies reportedly participating in the just-ended first round of bids, according to The Wall Street Journal. Others reportedly in: private investment firm TPG, and an investment group including Bain Capital, Vista Equity Partners and former Yahoo CEO Ross Levinsohn.

Most of the bids came in between $4 billion and $8 billion, the Journal reported. Britain's Daily Mail, which had considered submitting a joint bid, “has not submitted a bid to purchase Yahoo!” parent company Daily Mail and General Trust said Wednesday.

Yahoo's board and management will work with the committee that's received these bids, which were due Monday.

Also in on the bidding process, Reuters reported, were private equity firms Apax Partners LLP, Apollo Global Management LLC and Warburg Pincus LLC.

Verizon, Apax, Apollo Global, and Bain declined to comment to USA TODAY. Yahoo spokeswoman Rebecca Neufeld said in a statement, "as we move forward with the process, in order to maintain its integrity, we do not intend to provide additional updates or comment on specific details."

YAHOO SALES

News of this motley group of companies that submitted bids, a narrowing of those reportedly interested, comes on the heels of a Yahoo earnings report that showed the company struggling amid increased competition, corporate restructuring and constant media scrutiny.

Yahoo did beat analysts' expectations on earnings per share and revenue with non-GAAP first-quarter earnings of 8 cents, compared to 7 cents, as estimated by S&P Global Market Intelligence. Revenue minus the cost of traffic acquisition was $859 million, beat estimates of $846.1 million and within Yahoo's own forecasts.

However, first-quarter sales and net income were down significantly compared to the same quarter in 2015. Revenue fell 11% to $1.087 billion, while Yahoo reported a $99 million net loss, compared to $21.2 million in net income last year.

The bidding process, centered on Yahoo's core Web business including advertising technology and content such as Yahoo Mail, Yahoo Sports and Tumblr, has been spurred on by activist shareholders seeking for an exit strategy from Mayer's nearly four-year turnaround process.

Yahoo has until late June if it wants to announce a sale before its annual shareholders meeting. Starboard Value has nominated nine candidates, including its CEO Jeffrey Smith, to replace Yahoo's current board.

Yahoo likely hopes to conclude its auction by June, said SunTrust's Peck. "We could see increased activity from activist shareholders should they perceive Yahoo is not proceeding fast enough," he wrote.

"Everybody in our industry is watching this pretty closely because [Yahoo] is one of the first legitimate tech giants that weathered the bubble bursting in 2000, the economic downturn (and) the traditional growing pains with (co-founder and CEO) Jerry Yang leaving," said Acquisio's McIninch. "This is the first real ad tech or Internet pillar to sort of start to crumble, so I think a lot of people are watching to figure what the lessons learned are here."



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 http://www.usatoday.com/s .. cess/83271956/

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