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Verizon mulling $3bn bid for Yahoo’s internet business

Verizon Communications Inc is reportedly readying a second-round bid for Yahoo Inc’s core internet business, valued at approximately $3bn; $5bn less than previously anticipated.

Previous bids for the core business came in at between $4bn and $8bn but a fresh round of bidding to meet this Monday’s deadline has suggested Yahoo’s evaluation is falling below expectations.

The company is expected to hold at least one more round of bidding, and the offers could change by the final round, the Wall Street Journal reported.

It was expected that Verizon, considered to be the front runner in the race to acquire the business, would up its offer beyond $3bn to head off competition from a number of private equity buyers keen to swoop in on a bargain.

It is not yet known if other contenders submitted a second-round bid before the deadline, which include private-equity firms TPG, Advent International and Vista Equity Partners, along with a group led by Dan Gilbert, the founder of Quicken Loans. The Daily Mail General Trust has previously expressed interest in acquiring the outfit.

Yahoo’s core business has been hit by declining returns with revenues dropping 18 per cent in the first quarter to $859.4m. The vast majority of its $35bn market capitalisation emanated from stakes in China’s Alibaba and Yahoo Japan.

Verizon, which acquired AOL Inc last year for $4.4bn, is seen as having the best chance in turning around the struggling business. It has been suggested Verizon would combine Yahoo’s web properties - which combined attract more than a billion users a month - with its growing business in online ads.

Verizon has previously indicated its bid is purely for Yahoo's core internet business, and does not include certain Yahoo assets, such as patents and real estate. Yahoo said earlier this year it is exploring the sale of such non-core assets, that could amount to more than $1bn.

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