Verizon to bid $3B for Yahoo’s core Internet business

The communications company will try to beat other potential bidders  such as private-equity firm TPG with a deal that would likely aim to combine Yahoo Web properties, with over 1 billion users a month, with Verizon’s growing business in online ads, the Wall Street Journal reported late Monday.

The bidding is far from final and Yahoo is expected to hold at least one more cycle of bidding, WSJ said quoting people familiar with the matter. But the price offered by Verizon could be an indicator of which way the fight for the acquisition of the Internet company is going.

Verizon is not unfamiliar to the acquisition and integration of Web companies after its 2015 acquisition of AOL for $4.4 billion.

Yahoo posted a loss of $99 million on revenue of a little over $1 billion in the first quarter of this year. Revenue in the first quarter of last year was over $1.2 billion.

Yahoo had at one point last year considered spinning off its 15.4 percent stake in Alibaba Holding Group, through a company called Aabaco Holdings, but held back on the move because of uncertainties about potential tax implications.

A powerful investor group, Starboard Value, countered that the proposed spin-off of Aabaco was not Yahoo’s best option, and the company should instead explore the sale of Yahoo’s core business of search and display advertising, while leaving Yahoo’s ownership stakes in Alibaba and Yahoo Japan in the existing corporate entity.

The company said when announcing its first quarter earnings that it had formed a committee of independent directors to consider “strategic alternatives," while continuing to consider the reverse spin-off of its Internet assets to a newly formed company, which was mooted by the company in December. 

The Alibaba stake is worth far more than the Internet business, with some estimates putting it at close to $30 billion.  A number of companies have shown interest in investing in Yahoo’s Internet business, including Twitter, which for a while reportedly considered a possible deal.