One of the worst-kept secrets on the street is much closer to becoming a reality, according to reports.
For weeks rumors have been swirling that Verizon Communications (NYSE: VZ) was one of the parties interested in acquiring Yahoo! (NASDAQ: YHOO). It appears both sides are very close to announcing a deal.
Reports indicate Verizon may pay up to $5 billion U.S. for Yahoo’s core internet business, a price tag that doesn’t include things like the company’s patents or its real estate.
After years of trying to turn the company around, Yahoo CEO Marissa Mayer finally gave into critics months ago and announced the company would look at strategic alternatives for parts of its business. Remember, Yahoo’s stake in Alibaba has grown to the point where it dwarfs the rest of its assets.
Other companies included in the bidding process were reportedly AT&T, as well as several buyout firms. Quicken Loans founder Dan Gilbert was also rumored to be making a bid, with Warren Buffett supplying the capital.
With wireless growth slowing, Verizon has been aggressive in buying up web properties, including AOL last year. If it acquires Yahoo, it will be a solid number three in digital ad sales, a market dominated by Google and Facebook. These properties also give it plenty of opportunities to push its own products to millions of readers in a cost effective way.
Yahoo shares rose 1.2% in early trading on Friday to $39.31. Verizon shares were up a similar amount, increasing 1.1% to 55.99. Both companies are quite close to 52-week highs.
