Verizon Is Closing In On Deal To Buy Yahoo

Bloomberg sources said in a Friday report Verizon is close to closing on a deal to acquire struggling Internet company Yahoo.

An agreement with Verizon would end the bidding process for Yahoo’s core internet assets which started earlier this year.

Additionally, Bloomberg is reporting that a long-awaited deal could be announced in the coming days.

Among the bidders interested in the company’s core business were Japanese online retailer Rakuten, Yellow Pages owner YP (backed by AT&T), Quicken Loans founder Dan Gilbert, Vector Capital Management, private equity suitor TPG, and others. The company is slated to report its earnings next week on Tuesday, so it may have chose to hold the the Yahoo acquisition announcement until then as well.

Verizon has long-been considered the favorite to buy Yahoo’s internet assets, which it wants to combine with AOL, which it bought previous year for $4.4 billion.

But other than Tim Armstrong’s needs and revenge fantasies, there is a lot to question about why Verizon would pay $5 billion for parts of a very wounded company. Together with AOL, the new Yahoo under Verizon may have a better chance of competing in a digital advertising market dominated by two big players. Yahoo will expand Verizon’s advertising base by 200 million and include a large swathe of worldwide visitors. While some observers originally figured that Yahoo could fetch as much as $10 billion for its core business – which excludes its stake in Alibaba and Yahoo Japan – bids so far came in below that, according to observers.

Verizon reportedly has considered merging Yahoo’s content with its AOL unit to create a destination that would drive more engagement. Most of the advertising, though, has been flowing to internet search leader Google and social networking leader Facebook Inc.

“In his note, issued Tuesday after Yahoo released its second-quarter earnings report, Gillis criticized the company’s $482 million of Tumblr, which it acquired three years ago for $1.1 billion and had already written down by $230 million earlier this year”.