Verizon (NYSE: VZ) is reported close to nail down Yahoo (NASDAQ: YHOO) deal on Friday. Verizon has been deemed as the most likely buyer months; other potential buyers include AT&T, Quicken Loans’ founder and Cavaliers’ owner Dan Gilbert and private investment firm TPG, according to Bloomberg.
Last June, Verizon closed its $4.4 billion acquisition of AOL, aiming to be a leader in technology and media as its wireless business matures. Verizon Wireless segment constituted about 70% of its consolidated revenues. Not so much material differences exist among services provided by other companies like AT&T and T-Mobile. Cutting price may be a shortcut to gain market share but it’s can not last for long period. For Verizon, buying AOL and then potential purchase of Yahoo are a part of strategies to monetize its user base by video services and online advertising.
It’s hard to value the core business of Yahoo with about $37.3 billion market cap, because about $31.17 billion market value is attributed to its ownership in Alibaba Group and $2.50 billion equity investment in Yahoo Japan, according to its 2015 annual financial report. Yahoo has set aside about 3,000 patents into a subsidiary called Excalibur and hired Black Stone IP, to separately auction it, said by Wall Street Journal. Verizon with a market Cap around $228 billion and $4.47 billion cash in 2015 balance sheet has enough financial resource to purchase Yahoo and incorporate it into its blueprint.
A sale could be announced as soon as early next week, sources told CNBC on Friday.