Yahoo (YHOO, Financial) has released details on its leading bidders for a buyout and the bid ranges vary considerably. The leading bidders currently are Dan Gilbert, AT&T (T, Financial) and Verizon (VZ, Financial).
Dan Gilbert, founder of Quicken Loans Inc. and Cleveland Cavaliers owner has bid approximately $5 billion. Gilbert’s bid is supported by Warren Buffett (Trades, Portfolio) and would put the company under new management.
AT&T appears to currently be the leading bidder with a reported $5 billion bid in the most recent round. A buyout from AT&T would help the telecommunications company expand its business in digital and would also give the company further growth momentum after its recent acquisition of DIRECTV.
In AT&T’s most recent earnings report for the first quarter of 2016, the company reported revenue of $40.5 billion, an increase of 24.3% from the comparable quarter. The first quarter’s results included the integration of the new DIRECTV business, which was completed on July 24, 2015 and is expected to help AT&T continue to grow revenue in the near-term. Earnings per share growth in AT&T’s most recent first quarter was also robust with a comparable quarter growth rate of 10.8% at 72 cents. AT&T also has continued to post steady cash flow and as one of the top 25 largest companies in the world, it has the resources available for another large acquisition.
Verizon, while the previous frontrunner for the Yahoo business, has reported a lagging bid of approximately $3.5 billion with its bid excluding patents and real estate, two key aspects of the business and business deal overall. Verizon has historically been a low market bidder for new acquisitions, recently turning down new market networks that didn’t meet its integration and value standards. Speculators have touted the Verizon and Yahoo deal because of the synergies that could be generated from an integration with Yahoo and Verizon’s newly acquired AOL; however, it seems that the multiple parts of Yahoo’s business may not warrant a buyout price of greater than $5 billion for Verizon.
Yahoo is still expected to further negotiate with current bidders, and given the current range of bids, it seems that the company could potentially go to multiple bidders. It appears the bidding and negotiations will continue over the next few weeks with Yahoo expected to complete the deal by the end of July.
A recent report from CNBC gave further insight on the recent Yahoo bids and timeline for the process.
Disclosure: I do not own any shares of any stocks included in this article.
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