AT&T Inc. has made a bid for Yahoo Inc., according to people familiar with the matter, and is a contender to acquire the Sunnyvale, Calif.-based company's core Internet business.
The telecommunications giant had previously decided against making an offer, people familiar with the matter said in April. AT&T kept one foot in the process through its stake in digital advertising business YP Holdings LLC., which had proposed a merger with a subsidiary spun out of Yahoo's core business. However, YP is no longer pursuing such a transaction, said one of the people, all of whom asked not to be identified because the matter is private.
Shares in Yahoo fell 5 percent Wednesday to close at $35.59 in New York. AT&T was little changed at $38.62.
AT&T's continued presence in the bidding process pits it against rival Verizon Communications Inc., which has long been considered a front-runner to buy Yahoo. While Verizon remains a favorite to acquire Yahoo, it didn't submit one of the highest first-round bids, two of the people said.
Representatives for AT&T, Verizon, Yahoo and YP declined to comment.
Dallas-based AT&T, which has a market capitalization of about $237 billion, can easily afford to compete in an auction. The company could pair Yahoo's algorithm-based advertising technology with its mobile video service, which it started after last year's $48.5 billion acquisition of DirecTV. AT&T also owns a joint venture with the Chernin Group called Otter Media, which invests in digital media.
Earlier this month AT&T ended a partnership with Yahoo, handing a Web-hosting contract for its mobile and desktop customer portal to Synacor Inc., an Internet-services company.
AT&T may also be interested in Yahoo to help it compete with Verizon, which bought AOL Inc. last year and now has advertising technology and media properties that are similar to those owned by Yahoo. Verizon -- which has made clear its desire to buy Yahoo -- may still be a more likely suitor than AT&T, two of the people said.
Yahoo's financial advisers are spending extra time considering proposals from companies and private equity firms that made higher bids, but don't know Yahoo's business as well, one of the people said. The company received more than 10 initial offers ranging from about $4 billion to $8 billion, people familiar with the matter have said.
The sales process is likely to continue for another two to three weeks, another person said. Bidders have already met with Yahoo's management to get due diligence information, another person said.
Business on 05/26/2016