Report: Verizon to bid $3 billion for Yahoo web assets

SAN FRANCISCO — Verizon Communications, long considered the favorite in the Yahoo asset sales sweepstakes, plans to submit a $3 billion bid, according to a published report.

TPG Capital, a private-equity firm, was also expected to submit a second-round bid, the Wall Street Journal reported late Monday, citing people close to the matter.

A third round of bidding is anticipated in the months-long confidential auction process, as Yahoo weighs options in CEO Marissa Mayer's turnaround plan.

Yahoo declined comment.

Verizon could not immediately be reached for comment.

If the bid price of Verizon is any indication, Yahoo is falling short in what it hopes to fetch for its assets.

In April, a month prior to the deadline for the first round of bids, analysts speculated Yahoo's core Internet business — assets such as its advertising and search business, Yahoo Sports and Tumblr — could be worth $5 billion to $8 billion.

Bidders reduced their offers, however, following presentations f-rom Mayer on the Silicon Valley company’s financial outlook, the Journal reported, citing unnamed people close to the matter.

"As the year progressed, and Yahoo's revenue declined, so did the bid values," said Dave Heger, communications analyst at Edward Jones. "It is obviously a declining business."

Verizon's bid would exclude Yahoo physical property and equipment, as well as intellectual property, which could be valued at $750 million and at least $1.5 billion, Robert Peck, an Internet equity analyst at SunTrust Robinson Humphrey, said in a note to investors Tuesday. That would imply Yahoo's core business is valued at about $5.5 billion, he said, "which is reasonable at this stage per our prior expectations f-rom a strategic buyer of ($6-8B)."

He suspects Yahoo will have a final stage of bids in July, "as the several bidders weigh their relative stance and desire. Several (private-equity) groups and other strategics theoretically remain in the bidding, which could take the ultimate final bids for the "core" closer to our $6B estimate."

Contributing: Mike Snider.

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