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Telecom, Verzion

Verizon Acquires Yahoo for $4.83 Billion

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Setting the stage for a bigger internet leap, Verizon Communications Inc. has acquired Yahoo Inc’s core internet business for a sum of $4.83 billion.

The country’s largest telecom giant has revealed its plans to combine Yahoo with another faded online star AOL, which was also acquired by Verizon last year for an amount of $4.4 billion. The costs of high stock compensation deals that were given to employees by Marissa Mayer, Yahoo CEO, will also be covered by Verizon.

The current CEO, Marissa Mayer, seems to remain with the company for the time being. Although speculations are there that she is not going to remain for long at the position.

The acquisition is expected to complete by the first quarter of next year. Tim Armstrong, AOL CEO passed a statement stating “We have enormous respect for what Yahoo has accomplished: This transaction is about unleashing Yahoo’s full potential, building upon our collective synergies, and strengthening and accelerating that growth,” “Combining Verizon, AOL and Yahoo will create a new powerful competitive rival in mobile media, and an open, scaled alternative offering for advertisers and publishers.”

Lowell McAdam, Verizon chief executive said “Just over a year ago we acquired AOL to enhance our strategy of providing a cross-screen connection for consumers, creators and advertisers. The acquisition of Yahoo will put Verizon in a highly competitive position as a top global mobile media company.” Verizon will take over the ailing company’s online assets including mail, search and instant messaging, as well as its real estate holdings and ad technology. Yahoo’s cash, stakes in Alibaba Group Holdings and Yahoo Japan are excluded from the sale.

By combining AOL and Yahoo, Verizon is looking forward to providing a serious challenge to its two main competitors, Google and Facebook. However, a UBS analyst commented “Consumer interest in Go90, Verizon’s mobile video portal, has been tepid,” “Meanwhile, trends at Yahoo have been difficult, with the company losing share of mobile ad dollars to the heavy weights (Google, Facebook, etc.)…. While this deal will barely move the growth or margin profile of Verizon, synergies over time could provide upside to earnings.”

AT&T, Telecom, Verizon

Verizon May Beat AT&T in Bidding for Yahoo

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Verizon to overtake Yahoo

According to financial analysts at Barclays, AT&T does not seem to be serious about bidding for Yahoo, leaving Verizon to be the front runner buyer of the company.

A research note written by Barclays analysts says “We are hard pressed to see AT&T enter the Yahoo frenzy.” “Recent reports from Bloomberg suggest that AT&T might be interested in Yahoo’s Internet business. While it is premature to assume that AT&T is not interested, we find it hard to envision the carrier earnestly would move forward with a bid given it has its hands full integrating DTV, is participating in the broadcast spectrum auction and seems focused on asset optimization vs. augmentation.”

AT&T’s decision to buy Yahoo would depend on many aspects, such as the content included in the deal, the scalability of the deal in terms of subscribers, the additives available through transaction and the bidding amount.

Last month, AT&T emerged to be in direct competition with Verizon by submitting a bid for Yahoo. The internet company received nearly 10 offers ranging from $4 billion to $8 billion from the interested companies. AT&T was initially disinterested but later entered into the list of bidders by submitting a bid for the company’s core internet business. Other bidders include entities supported by Warren Buffett and Bain Capital.

AT&T is currently working to incorporate its $49 billion purchase of DirecTV. The company has committed to offer a refreshed DirecTV service with availability across AT&T’s networks as well as the networks of its competitors in the later part of this year.

The company seems interested in Yahoo’s advertising business, as it may help in AT&T’s strategy to increase its advertising technologies and offerings. The results of the cross-screen advertising trials for AdWorks business conducted with Opera Mediaworks, was announced by the company last month. Among the companies that participated in the trials, Walmart was also one and reported “a statistically significant lift in both brand and message favorability.” The trials pooled the advertising reach of AT&T’s 13 million TV households with 285 million mobile phones running the advertising technology of Opera.

As per Barclays analysts, the bidding for Yahoo is one of the rare major potential transactions in the telecom sector. “The combination of a presidential election year and the current broadcast spectrum auction process has diminished the prospect for larger scale M&A activity across the U.S. telecom sector, in our view,” commented analysts.