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Verizon is close to buying Yahoo assets: sources

Verizon is close to buying Yahoo assets: sources

The protracted question of who is buying beleaguered Yahoo may finally have an answer.

According to three¬†reports published today, and our own sources, Verizon (which owns TechCrunch by way of AOL) is now the most likely company to snap up¬†the company‚Äôs core assets ‚ÄĒ which include its search, content, mobile and advertising business ‚ÄĒ and possibly also some real estate, for around $5 billion. A final decision could come¬†in the next few days, meaning possibly as soon as today, Monday, or Tuesday.

Verizon is due to report earnings next week on Tuesday, July 26, so that‚Äôs a logical day for the news to come out. When we asked a Verizon executive¬†for a comment on reports out this morning from CNBC and Bloomberg about the possibility¬†of the deal, the short response was less¬†straight denial, and more¬†‚Äúwatch this space‚ÄĚ.

‚ÄúNo comment at this time,‚ÄĚ Caroline Campbell, SVP of brand and communications at AOL, said in an emailed response.

Later, a report from Recode noted that Verizon, which had originally thought to be offering around $3 billion for core assets, might have bumped its figure up to about $5 billion.

As a side note to all this, some anecdotal evidence.¬†We‚Äôve been hearing for months that AOL offices in different regions¬†have been readying¬†themselves for a future with¬†more purple¬†in it.¬†That‚Äôs run the gamut from keeping a holding pattern over¬†new¬†office space and future hires, through to strategic ‚Äėsprints‚Äô to consider developments in coming¬†months around R&D initiatives, advertising and more.

‚ÄúWe are preparing. It sometimes feels like the only thing we talk about,‚Ä̬†one AOL executive told me.¬†It may be a sign of how confident Verizon and AOL are of a winning bid, but¬†also of how they would like to kickstart an integration and get working together as quickly as possible. (Poor integrations being one of the killers of so many mergers, of course.)

There have been several potential buyers for Yahoo named over the last several months, with the field reportedly also including AT&T, a private equity group led by TPG, and an investor group led by Dan Gilbert of Quicken Loans.

Reportedly, the¬†offers that have come in have been¬†between $3 billion and $5 billion for a range¬†of assets that include not only the search and media businesses, but real estate and IP. Yahoo‚Äôs ‚ÄúExcalibur‚ÄĚ patent portfolio contains¬†2,600 technical patents¬†and Yahoo optimistically values it¬†at upwards of $1 billion.

But after months of small movements in this saga, and years of steady decline at Yahoo, in a way, it’s not at all a surprise to hear that Verizon may end up getting Yahoo at the end of it.

Last year, the telco giant acquired AOL (which owns us) for $4.4 billion to build up its advertising and media businesses as a complement to and diversification from its mobile and fixed network operations. 

The thinking is that adding in¬†Yahoo to AOL would help to scale up that business to compete even better against the likes of Google ‚ÄĒ and (nowadays) other content discovery platforms like Facebook, which are all vying for the same revenues.

It’s a long-standing strategy: even in the years before Verizon acquired it, AOL was linked with a potential Yahoo merger or acquisition much for the same reason.

Why? Yes, AOL wanted more scale, but it seems that it also senses a gap in the market. Services like Facebook and Google pose their own challenges to media owners because the they hope to create and own content, not just help others monetise their content. In that sense, you can see how the folks at AOL and Verizon might think that building a third alternative to Google and social networks could stand a chance as a primary monetizing partner to media companies and more.

But if scale is what AOL is after, it will be interesting to see how and if it can blow more oxygen into the dying embers that are Yahoo’s current business.

In its years under CEO Marissa Mayer, Yahoo gained a reputation for its aggressive acquisition and consolidation strategy, spending hundreds of millions of dollars on small and larger startups to breathe life back into its products.

But with no big hits coming out of any of those moves, the strategy looked increasingly haphazard and ill-managed. The intended transformation of Yahoo never really came to pass and the company has failed to grow. Today, its most valuable assets are the same as they were before Mayer came on board. They are its stake in Alibaba, which is worth around $32 billion; and Yahoo Japan, worth around $8 billion. Neither are included in the asset sales that are likely to complete very soon.

Featured Image: Ken Wolter/Shutterstock

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