Verizon is closing in on Yahoo. Verizon and Yahoo are almost one. Further to our recent news post on this topic, it now seems as if a $5 billion acquisition deal is soon to be announced. The news is expected Monday, although it could be announced sooner. Other bidders, including a group led by Dan Gilbert of Quicken Loans, and a bid by private equity company TPG, have apparently been informed by Yahoo that the Verizon bid was being accepted.
The whole process has now taken 4 months, which may not be surprising given the difficulties in which Yahoo found itself. Competing with Google as a search engine would never succeed, and it never reached the heights of Google and Facebook in the digital ads business.
The transaction will have to be cleared by regulators and be agreed by shareholders. Do shareholders really want Yahoo hanging around their necks? This is likely one of the major problems faced by Verizon in addition with how Yahoo could be integrated into the business. In fact, until the moment the agreement has been signed by both parties, another offer might be thrown into the pot at the last minute – particularly by Dan Gilbert once he is aware of the terms being offered.
Other than Verizon and Yahoo, nobody knows what the terms of the acquisition are. Yahoo has a number of assets in addition to the web directory and email business with which most people are familiar. Yahoo owns many patents and these themselves may have some value. Yahoo’s real estate is also worth money, although is steadily reducing. It is believed that the deal will be announced before Tuesday when Verizon’s quarterly results are due to be reported.
Nobody is going to say that this deal would come as a surprise! It has been the subject of many reports over the past few days, including here on Market.biz, the only sensible discussions revolving around the financials and the extent of the purchase. Nothing, however, had been confirmed and is still not confirmed to be truthful! Expected, yes, but confirmed? Wait a day. . .
Verizon purchased AOL last year for $4.4 billion, so the $5 billion for Yahoo should not come as a surprise. The Yahoo deal is rumored to include the search deal Yahoo had with Mozilla – quite frankly, not the best combo in the world, particularly for Firefox users.
It is not quite certain what Verizon and Yahoo will be after with this deal. Google and Facebook are dominating the digital ads market, although perhaps Yahoo Sports may be useful and the Yahoo Finance sites have been well received. Yahoo’s mobile search business is not competing with Google.
Quite frankly, the biggest challenge of all will not be completing the deal, but integrating Verizon and Yahoo. They have little in common, and Yahoo has made some bad purchasing and investment decisions lately, for which current CEO Marissa Mayer will undoubtedly pay the ultimate price.
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