It looks like a few things have shifted in the process to get Yahoo sold off. First, several previous suitors have opted to drop out of bidding. Google was considering a bid, but declined (most likely do to the likelihood of heavy regulatory hurdles for taking out a competing search engine).
Surprisingly, Comcast and AT&T also chose to stay out of the running. The biggest shift is that Time Inc. has dropped out of the bidding. They were one of the more interested parties originally, but they concluded that "the degree of difficulty in righting Yahoo’s fortunes is too great." [Quote comes from the source: WSJ]
Ultimately, only a handful of interested parties remain in contention out of approximately 40 firms originally interested. The rising "top dog" is actually not too surprising... Verizon has risen to the top of the pack as the most likely candidate to make a deal. According to Craig Moffett, senior analyst at MoffettNathanson, a telecommunications-research firm, “Verizon is trying to pivot its business from analog to digital. Verizon believes that a combined AOL/Yahoo would provide the digital advertising platform they need to execute their video reinvention strategy.”
Apparently, Yahoo’s core business could fetch between $4 billion and $8 billion in the auction. Verizon has a market cap of about $210 billion, and around $4.5 billion in cash on its balance sheet. Right now it looks like the only real competition that Big Red has for the Yahoo acquisition comes from private-equity firms like Bain Capital, TPG and Advent International.
It's likely that if Verizon wants Yahoo bad enough, they will probably offer a premium above what the competing private equity firms are willing to offer. Despite that, sources within the industry have indicated Verizon is unlikely to pay more than Yahoo is worth. This is because Verizon is striving to restore its credit rating to what it had previously to spending $130 billion in 2014 to buy out Vodafone Group PLC’s minority stake in Verizon Wireless.
Overall, it looks like the Yahoo sale could be a long and protracted process, with the distinct possibility that Big Red will be the big winner.
Source: Wall Street Journal
