Verizon Reportedly Close to Acquiring Yahoo for Around $5B

(Los Angeles Times/TNS) – Verizon is reportedly nearing a deal to purchase Yahoo for close to $5 billion, bringing to an end a months-long bidding process for a now-ailing company that was once an internet trailblazer.

The sale is still being deliberated, but could be announced early this week, according to Bloomberg.

Verizon has reportedly emerged as the leading bidder ahead of AT&T, Quicken Loans Inc. founder Dan Gilbert, and private equity firms TPG and Vector Capital.

Founded as a guide to the internet in 1994, Yahoo quickly grew from a Silicon Valley startup to a tech giant. Its properties still attract more than 1 billion visitors a month, but the company has struggled to keep up with competitors Google and Facebook in search and advertising revenue and lagged far behind as the industry moved to mobile.

A turnaround plan implemented by Chief Executive Marissa Mayer has failed to win over investors.

Verizon, the nation’s largest wireless carrier, has been building itself into an online content business. Last year, it acquired AOL — one of Yahoo’s longstanding rivals — for $4.4 billion (Mayer rejected a deal to merge with AOL in 2015).

A purchase could open the doors for Verizon to generate additional revenue through Yahoo’s editorial properties, video services and advertising technology.

If the deal goes through, Verizon plans to combine Yahoo’s internet assets with AOL, according to Recode.

Verizon is perceived as a favorite because it sees the most value in Yahoo, said Rob Enderle, principal analyst with the Enderle Group.

Although Yahoo brings in revenue, its costs are too high. By joining forces with AOL, Yahoo’s costs would come down, he said.

It would also bolster Verizon’s stable of proven editorial properties — sites around which it can sell advertising.

“They are going for content,” he said. “One end goal is if you’ve got the content, you’ve got the ads.”

Yahoo began its march toward a sale after the company failed to spin off its stake in Chinese e-commerce provider Alibaba, reportedly worth more than $32 billion, because of the possibility of incurring a capital gains tax.

Yahoo shares have risen more than 15 percent this year. On Friday, the stock rose 53 cents to $39.38.