U.S. wireless carrier Verizon is reportedly moving forward with a first-round bid to acquire some assets from struggling Internet company Yahoo.
Citing sources familiar with the matter, Bloomberg reported Thursday Verizon is targeting acquisition of Yahoo’s web business. The carrier is also reportedly open to take over Yahoo’s stake in Yahoo Japan Corp. as part of the deal, Bloomberg said.
Yahoo’s stocks jumped up 1 percent briefly this afternoon on the news before falling 1.26 percent by 4 p.m. ET.
The report is consistent with comments made by Verizon CEO Lowell McAdam in February. At the time, McAdam said the carrier would consider purchasing some Yahoo assets “at the right price.” According to McAdam, some of Yahoo’s assets would make a good fit for the carrier’s AOL business, which Verizon sees as a future growth engine for the company.
According to Bloomberg sources, Verizon would give Yahoo CEO Marissa Mayer the boot and combine Yahoo and AOL under the direction of Verizon executive vice president Marni Walden and AOL CEO Tim Armstrong.
But Yahoo could prove to be a dead weight regardless of leadership changes.
A Wednesday report from Re/code’s Kara Swisher – who had a chance to review some of the information distributed by Yahoo’s bankers to bidders – indicates the company is expecting to continue its freefall through 2016. According to the report, Yahoo’s revenue is expected to drop nearly 15 percent this year, while earnings are predicted to plummet more than 20 percent.
Those figures affirm comments made in January by Recon Analytics’ Roger Entner, who said Verizon’s acquisition of Yahoo would bring only issues without real value. At the time, Entner called Yahoo’s business “a train wreck.”
Despite this, Verizon’s bid could be up against competition from Google and Time Inc., which are also reportedly weighing whether to make an offer. Private equity funds Bain and TPG also have offers in the works, according to the report.
Other potential suitors, including AT&T, Comcast and Microsoft, have backed out of the game, Bloomberg said.
Those looking to participate will have to make up their mind fast. Late last month, Yahoo set an April 11 deadline for bid proposals for its core assets.
