Verizon Communications Inc. (NYSE: VZ) plans to submit a second round bid of $3 billion for Yahoo! Inc. (NASDAQ: YHOO)’s core internet business. Private equity firm TGP Investments, LLC also expected to tender an offer before the deadline.
Verizon Communications leads the bid of Yahoo’s internet business, and is expected to meet Monday’s deadline for the second round of bids. However, Yahoo is expected to hold one more round of bid and offers that could change by the final round of bids.
Yahoo has been trying to recover from its poor business, CEO Marissa Mayer aimed to shake things up by refocusing the company’s business on Mobile App services. However, this shift focus have left consumers and investors cold. The current situation forced board members to consider other options which include potential sale.
Verizon, which acquired AOL Inc. last year for $4.4 billion, is seen as having the clearest path to turning around Yahoo. The telecom giant likely would combine Yahoo’s web properties, which together attract more than a billion users a month, with its growing business in online ads. That would enable Verizon to offer more than at least some other bidders.
In submitting its bid, Verizon Communications told Yahoo it would be willing to pay a higher price if Yahoo agreed to help cover the cost of employee severance payments for any workers cuts as a result of the acquisition.
The bulk of Yahoo’s roughly $35 billion market capitalization is comprised of its stakes in Alibaba Group Holding Ltd and Yahoo Japan Corporation (TYO: 4689).