Verizon aims to grow their content operations and are in negotiations to buy Yahoo! Inc. for approximately $5 billion.
There have been months of speculation surrounding the possible sale of Yahoo! Inc. amongst potential bidders but Verizon has emerged as the most likely buyer. Other notable contenders have been AT&T, a private equity group led by TPG, and an investor group led by Dan Gilbert of Quicken Loans.
Bloomberg reported news about the potential acquisition and on their TV program asked the opinion of CEO David Kirkpatrick of Techonomy, who had this to say, “Verizon has big ambitions to grow its content operations to become a more vertically integrated company.”
Integration is just what Verizon wants, as it seeks to expand its advertising network. Verizon will be tacking on hundreds of millions of users under their media umbrella and positioning its advertising network as a possible third option for businesses other than Facebook and Google. Facebook and Google have a combined control of 76 percent internet advertising growth. Last year, Verizon made a $4.4 billion purchase on AOL and if Verizon wins the bid for Yahoo!, the integration with AOL and Yahoo could significantly make them a much stronger competitor in the internet/mobile advertising space for media companies as a third alternative for monetization.
Yahoo! Inc. owns quite a bit of assets, such as a $32 billion piece of Alibaba, Yahoo Japan accounting for $8 billion and not to mention the 2,600 technical patents in Yahoo’s Excalibur portfolio, valued at $1 billion. These additional patent assets are still unclear as to whether or not Verizon’s offer of $5 billion includes any of them in negotiations.
The deal could also be the final signal for Chief Executive Officer Marissa Mayer to make her exit from the company. Mayer, made significant efforts to re-invent the Yahoo! brand but was unable to grow forward, despite hundreds of millions of dollars invested in startups that never made it off the launching pad as effectively as she and the company had strategically planned. An example was the purchase of Tumblr, which was bought for $1.1 billion and is currently valued at $482 million. Due to this fact, rumors circulated of poor management, lack of product growth and an increasing possibility of a company sell off.
Final announcement of the Yahoo! Inc. purchase from Verizon could come as early as next week.