Verizon buys out Yahoo for US$4.8 billion
Yahoo shareholders keep stakes on Alibaba, Yahoo Japan
Verizon Communications is set to announce its US$4.8 billion (AU$6.4 billion) deal to takeover Yahoo! Inc.’s core businesses before market opens Monday in New York.
According to Bloomberg sources, America’s largest wireless communications service provider emerged as the winner of the soon-to-conclude bidding for Yahoo’s core assets.
Spokespersons for Verizon and Yahoo have yet to confirm the report, but if the two are closing on a deal, the takeover will increase Verizon’s digital advertising size and real estate portfolio. By combining Yahoo’s operation with AOL, Verizon will propel itself to the third ranking in the digital advertising market, just behind Google and Facebook.
Remaining assets
However, the buyout excludes Yahoo’s 15 percent stake in Chinese e-commerce company Alibaba Group Holding Ltd. and 35.5 percent stake in Yahoo Japan Corp. These two assets account for most of Yahoo’s US$37 billion (AU$49.5 billion) market capitalisation. Yahoo is yet to lay out its plans for its investments in Alibaba and Yahoo Japan.
Bidding of Yahoo’s core business began in April and in June, Verizon submitted a US$3 billion (AU$4.02 billion) offer, which initially did not cover Yahoo’s real estate properties.
Aside from Verizon, interested bidders include Verizon rival AT&T; a consortium led by Quicken Loans founder Dan Gilbert and backed by billionaire Warren Buffett; private equity firm TPG Capital LP; and a consortium of buyout firms Vector Capital and Sycamore Partners.
On Friday, Yahoo gained 1.4 percent to close at US$39.38 (AU$52.73) after Bloomberg News reported it was closing in on a deal with Verizon. Meanwhile, shares of Verizon advanced 1.3 percent to US$56.10 (AU$75.12) apiece. This is despite Yahoo’s 19 percent drop on its second quarter revenue, minus commissions paid to partners for web traffic.
Founded in 1994 by Stanford graduate students Jerry Yang and David Filo, Yahoo has reached its peak valuation at US$125 billion (AU$167.37 billion) in January 2000.
