Who Will Buy Yahoo's Internet Business?

yahoo-web-logoHours after reports that Yahoo! Inc. (Nasdaq: YHOO) is mulling a sale of its core business, a number of potential buyers were cited. So who will buy Yahoo's Internet business?

The list is diverse and lengthy, indeed. It includes other Internet companies, tech giants, cable firms, telecoms, media conglomerates, and international players.

Among companies expected to express interest are Verizon Communications Inc. (NYSE: VZ), Barry Diller's IAC/InterActiveCorp (Nasdaq: IACI), News Corp. (Nasdaq: NWSA), AT&T Inc. (NYSE: T), Comcast Corp. (Nasdaq: CMCSA), Walt Disney Co. (NYSE: DIS), Microsoft Corp. (Nasdaq: MSFT), and Alphabet Inc. (Nasdaq: GOOG, GOOGL).

Japan's Softbank Corp. (OTCMKTS: SFTBY), the biggest shareholder in Yahoo! Japan, could also emerge as a viable buyer.

Pivotal Research Group analyst Brian Wieser said in a research note Tuesday that he values that business at about $1.9 billion, not including cash on hand. Wieser said realizing value is far from assured since Yahoo's "core business is in seemingly permanent decline."

Private equity firms are also among those who will potentially buy Yahoo's Internet business. Such a move would allow Yahoo to undergo some dramatic restructuring away from nitpicking public eyes. A private equity firm could tap Yahoo's free cash flow while slashing investments.

While Yahoo has sputtered over the last several years amid a declining Internet search market share and some expensive acquisitions that haven't paid off, it still commands a wide reach. Its Internet properties attract more than 200 million monthly visitors in the United States every month.

Here's what Yahoo could do for some prospective buyers...

Who Will Buy Yahoo and Why

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  • Google and Microsoft: Given Google and Microsoft's search engine businesses, Yahoo would complement both and would give each more scale, which is crucial in this segment.
  • Verizon: Buying Yahoo would boost its growing advertising technology business. The telecom giant shelled out $4.4 billion in June on AOL. AOL is key in helping third-party websites sell more ads. Yahoo, on the other hand, boasts a vast pool of registration data and email addresses. AOL's reach, Verizon's wireless business, and Yahoo's data would create a more challenging rival to ad tech giants Google and Facebook.
  • Comcast: It has been bulking up its ad tech capabilities via acquisitions of firms such as Free World and Visible World. Yahoo would further bolster its ad range.
  • IAC: With sites like CollegeHumor and About.com under its umbrella, a Yahoo deal would kick in some high-profile assets with vast reach on mobile platforms.
  • Disney: Yahoo's assorted audience and direct consumer data could be valuable for marketing its theme parks and movies.
  • AT&T: It could use Yahoo's data pool to rival what Verizon is aiming to accomplish through its AOL acquisition.

Still, Yahoo may not decide to sell its core Internet business. The struggling company is also considering spinning off its Alibaba Group Holding Inc. (NYSE: BABA) stake.

The Yahoo stock price jumped more than 7% to $36.39 intraday Wednesday on news of a possible sale of its Internet properties.

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