Yahoo Approaching End of Auction Period - The UpStream

Yahoo Approaching End of Auction Period

posted Saturday Jul 16, 2016 by Scott Ertz

Yahoo Approaching End of Auction Period

Since Yahoo's decision to sell the internet business, several attempts have been made to figure out exactly how to carry out the sale. The final decision was to hold a confidential auction, where bidders could determine the pieces they were interested in, and the price they were willing to pay. The auction has been held in several rounds, with bidders dropping out over time. The current round, which ends Monday July 18, is the final, and the board is expected to make a decision shortly after.

The bids are likely to range wildly because of the nature of the auction, but are expected to come in at as much as $6 billion. These bids can include the company's advertising, email, media and search businesses, as well as intellectual property and land holdings. What will not be included is the company's 15 percent stake in Chinese retailer Alibaba, nor their 35.5 percent stake in namesake Yahoo Japan.

The bidder list has shrunk to include Verizon, AT&T, Dan Gilbert, co-founder of Quicken Loans, who is being backed by Berkshire Hathaway, and a handful of private equity firms. While there have been identified issues along the way, none of them have been big enough to see the major bidders drop out. The biggest issue was the recent revelation that Yahoo and Mozilla have an agreement that could put any new owner on the hook for upwards of $1 billion if Mozilla determines that the new owner is damaging to their brand.

The question that remains for the big 3 bidders is, what are their intentions for the purchase? Verizon's seem clear: they would likely roll Yahoo and recent acquisition AOL into a single business unit to provide media and information services. AT&T's interest in Yahoo is likely to place it in competition with Verizon's AOL unit. Gilbert and Berkshire Hathaway, however, are unknown, but Warren Buffett only gets involved when he sees long-term value, so there must be a plan in there somewhere.

Once the sale is finalized, the remaining task for what's left of the corporation will be to figure out how to derive enough value from their offshore holdings, namely Alibaba and Yahoo Japan, to justify the existence of the company.

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