Yahoo (YHOO) Takeover Bid Heats Up With AT&T In The Race

The takeover of Yahoo! Inc. (NASDAQ:YHOO) intensified with the U.S. telecom behemoth AT&T Inc. (NYSE:T) making a bid for the company. Yahoo has reportedly received more than 10 initial bids ranging from around US$4 billion to $8 billion.

Among the notable bidders are Verizon Communications Inc. (NYSE:VZ) and private equity firm TPG Capital LP. Before AT&T came into the picture, Verizon was considered as best suited to merge Yahoo into its online platform. However, the entry of AT&T may change the entire landscape.

Internet-based information service provider giant Yahoo is currently struggling with its core businesses. Its mail service, online sports, financial and general news sections and its vital online advertising technology, which includes the video advertising platform, BrightRoll have been on a decline. In Feb 2016, Yahoo revealed that it was considering "strategic alternatives" for its core businesses, including an outright sale or a spin-off.

Importantly, Yahoo boasts a significant user base that trails only Google of Alphabet Inc. (NASDAQ:GOOGL) and Facebook Inc. (NASDAQ:FB) . At present, Yahoo has more than 1 billion users for its e-mail, finance, sports and video sites.

The core businesses of Yahoo perfectly complement Verizon’s focus areas. In Oct 2015, Verizon launched its ad-supported mobile video service Go90 targeting the younger generation. To derive maximum benefits from its mobile video platform, in Jun 2015, the company took over AOL Inc. that provides advertising technology enabling automated buying and selling of ads online.

In Oct 2015, Verizon also acquired Millennial Media, a leading company that sells mobile ads across numerous websites and applications. Its advertising platform is designed to monetize applications for publishers and developers through the use of data-driven ad targeting.

AT&T was already involved in the Yahoo take over process through its subsidiary and Yellow Pages owner YP LLC. However, after the direct entry of A&T as a bidder, its subsidiary YP LLC. opted out of the race. Last year, AT&T acquired DIRECTV (NASDAQ:DTV), the largest satellite TV operator in the U.S. AT&T plans to offer online streaming-video service this year, using the DIRECTV brand. The acquisition of Yahoo would help AT&T to provide ad delivered Internet contents to the smartphone friendly next gen.