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Verizon’s pursuit of Yahoo’s 1 billion Internet users continues with a $3 billion bid for Yahoo’s Web business in a second round of bidding as the search company looks to sell off some of its assets to streamline its operations.
The latest Verizon bid, which was disclosed by an unnamed person who is familiar with the bidding, was reported June 6 by The Wall Street Journal. “Yahoo is expected to hold at least one more cycle of bidding, and the offers could change by the final round,” the story continued.
In April, Verizon was named as a very interested bidder for Yahoo, as other potential bidders, including AT&T and Comcast, dropped out of the competition, according to an earlier eWEEK story.
In February, reports indicated that Tim Armstrong, CEO of AOL, which Verizon owns, was leading Verizon’s interest in exploring a possible bid for Yahoo, according to an earlier eWEEK story. Verizon’s fascination with Yahoo centers on the 1 billion people who use its email, finance, sports and video services; its broad online content offerings; and its heavy Web traffic. The wireless carrier, which already has about 112 million subscribers, would like to pair the businesses to grow its audience for the wide range of services that it offers.
Yahoo has been having a tough time in recent years. In February, Yahoo announced that it is cutting about 1,700 workers, or about 15 percent of its workforce of 11,000 full-time employees, as it works to scale back its operations and business units to cut costs, according to an earlier eWEEK article.
Yahoo was founded in January 1994 as Jerry Yang and David Filo’s Guide to the World Wide Web, and then renamed Yahoo a year later.
Also expected to place a bid in the second round of the Yahoo auction was private-equity firm TPG, according to the Journal story. Details were not available on whether any new bids were submitted by other previous bidders, including private-equity firms Advent International, Vista Equity Partners and a group led by Quicken Loans founder Dan Gilbert, the story added.
Yahoo’s board launched an auction of its core business in February after it put aside plans to spin off its stake in Chinese e-commerce giant Alibaba Group Holding Ltd., according to an earlier eWEEK report. That $30 billion part of the Chinese retail giant was a deal engineered by Yahoo co-founder Jerry Yang a decade ago and today serves as one of Yahoo’s biggest assets. The company also owns a major stake in Yahoo Japan.
The bidding rounds for Yahoo’s Internet business have been ongoing since April, with telecom Verizon Communications still appearing to be the lead bidder in the battle for the company.
Yahoo ostensibly is being forced by activist investors who don’t believe in its competitiveness anymore to sell off its main business and keep the corporate identity of Yahoo as a shell to manage the rest of its assets.
Marissa Mayer, who took the helm at Yahoo in July 2012, has made many changes at the company—from banning employees in February 2013 from working from home to shuttering the AltaVista search engine in July 2013. Mayer was hired as Yahoo’s CEO and president after an embarrassing and distracting string of three CEOs came and went in a seven-month span.
Mayer was brought in to put Yahoo back on track as a leading, growing and stable Internet company. She came from Google, where she was one of that company’s first 20 hires in June 1999 and was the company’s first female developer when it was just getting started.
In May, it was reported that the second-round auction bid estimates for Yahoo were expected to come in at $2 billion to $3 billion, which was much lower than earlier estimates of $4 billion to $8 billion, according to an earlier eWEEK story.
If the bids don’t meet Yahoo’s expectations, the company could choose to drop its planned sale and reorganize itself to better attack the market.