Verizon's $3 Billion Yahoo Bid Is 'Reasonable'

According to the Wall Street Journal, Verizon Communications Inc. VZ has made a bid worth $3 billion for Yahoo! Inc. YHOO's Core assets.

Robert S. Peck of SunTrust Robinson Humphrey maintained a Buy rating on Yahoo.

Related Link: Verizon Reportedly Bids $3 Billion For Yahoo's Core Internet Assets

Peck mentioned that the Verizon bid reportedly excludes Yahoo’s PP&E and IP value, which could be valued at $50 million and “at least” $1.5 billion, respectively.

The analyst pointed out that the total value of the Core would, therefore, add up to $5.5 billion, which appears “reasonable at this stage per our prior expectations from a strategic buyer of ($6-8B).”

However, Peck also noted it was unclear whether the Verizon bid included Yahoo! Japan royalty payments, which the analyst values at over $1 billion.

“It appears that a final stage of bids is expected in July, as the several bidders weigh their relative stance and desire. Several PE groups and other strategics theoretically remain in the bidding, which could take the ultimate final bids for the "core" closer to our $6B estimate,” Peck stated.