Verizon to Seal Yahoo! Deal for $5 Billion Soon

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Verizon (VZ) is reportedly close to finalizing its purchase of Yahoo (YHOO).

The two companies were in discussions Friday and may announce a deal soon, according to several published reports. However, the transaction — which approaches $5 billion, one person told Bloomberg — is not final and could fall apart.

Shares of Verizon Communications (VZ) ended up 1.3% to $56.10 Friday. Yahoo (YHOO) shares closed up 1.4% to $39.38.

Representatives for Verizon and Yahoo declined comment.

Yahoo’s board began the sale process four months ago after abandoning a spin-off of its valuable stake in Chinese retailing giant Alibaba (BABA), worth $32 billion, over concern about transaction taxes. In an effort to separate Yahoo’s core business from that stake, the board agreed to explore a sale at the urging of activist investors including Starboard Value.

Under the potential deal, Verizon would buy Yahoo’s core business, which includes advertising, search and content such as Yahoo Finance, Yahoo Sports and Yahoo Mail.

Verizon’s bid could eventually include some of Yahoo’s real estate, said CNBC’s David Faber. The company has sought to sell its portfolio of thousands of patents, real estate and other assets. That would leave only its Alibaba stake and perhaps its 36% stake in Yahoo Japan, worth about $8 billion.

Verizon has long been considered the candidate to come out on top because the telecom provider has been beefing up its online video content and advertising on mobile networks. As far back as December 2015, Verizon CEO Lowell McAdam and CFO Fran Shammo said the company would look at Yahoo should it go up for sale.

“Obviously Verizon has been the heavy favorite all along through this process,” said Eric Jackson, managing director of investment firm SpringOwl, a Yahoo shareholder that has pushed the company to replace senior management and slash its workforce.

Bids have been in the $5 billion to $6 billion range, “just for the business,” Jackson said, who is not involved in the auction process. “As shareholders, obviously, we are hoping … that it will be even higher.”

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Source: USA Today | Mike Snider