California: Verizon communications
Inc. and others are expected to bid around $2 billion to $3 billion in the
auction for Yahoo Inc.’s core business, less than what the troubled Internet
pioneer was expected to fetch, according to people familiar with the matter.
The telecom giant is considered the
front-runner in a field that includes private-equity buyers, some of whom are
expected to bid in the low end of that range, the people said. As recently as
April, people close to the process said that Yahoo’s core business would likely
go for between $4 billion to $8 billion.
Some offers could still be above the
$2 billion-to-$3 billion range, other people said, and it is generally in the
interest of bidders to play down their enthusiasm in an auction. It is also
possible that not everyone will bid for all of the core business and that
proposals will be structured differently. Reportedly, Yahoo has set a deadline
in the first week of June for the next round of bids. It isn’t clear whether
that will be the final round or if another one will follow.
Bidders have lowered their expected
prices following weeks of sale presentations by Yahoo Chief Executive Marissa
Mayer at the company’s Sunnyvale, Calif., headquarters and its disclosure of
data that detailed the company’s flagging prospects.
The segment of Yahoo’s business that
Mayer has designated as its growth engine is slowing down dramatically. Revenue
from “mavens”—a financial metric the company introduced last year to track
mobile, video, native and social ads—rose 6.8 percent from the prior year to
$390 million. That compares with 26 percent in the fourth quarter, 43 percent
in the third period and 60 percent in the second quarter.
Potential buyers have in recent weeks
had access to a “data room” with nonpublic details about the company’s
financial performance and prospects.
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