Is Yahoo Getting Close To The Finish Line?

Is Yahoo! Inc. YHOO getting closer to the finish line? Yes, according to analysts at Cantor Fitzgerald.

Preliminary bids for Yahoo are due on Monday, April 11. There are reports of more than 40 interested parties, including Verizon Communications Inc. VZ, AT&T Inc. T, Comcast Corporation CMCSA, Time Inc TIME and SoftBank.

"We continue to believe that Verizon is the leading contender, as it can afford to pay the most given potential for cost savings," analyst Bob Peck of SunTrust wrote.

Cantor, which also thinks on the same lines, said, "A Verizon take-out makes the most sense to us given its ownership of AOL, Inc. AOL, and the scale benefits that would ensue from combining both units. A Google bid could prove difficult from a regulatory standpoint considering Google's dominant position in search."

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Cantor continued, "There is also the potential for management to partner with private equity (Bain and/or TPG, per Bloomberg) to submit a bid. We expect this process to remain fluid over the next several weeks, but it does look like we may be finally getting to the finish line."

Bloomberg, citing people familiar with the matter, reported Verizon plans to make a first-round bid for Yahoo's Web business next week, and is willing to acquire the company's Yahoo Japan Corp. stake to help sweeten the offer. Google, the main division of Alphabet Inc GOOGL, is also considering bidding for Yahoo's core business.

Meanwhile, the report said potential suitors AT&T and Comcast have decided against bidding, and Microsoft, which failed with a hostile bid for Yahoo in 2008, won't bid this time.

Yahoo has been on the downhill as it is unable to surpass Google in the search race and ad revenues. Meanwhile, the turnaround efforts of CEO Marissa Mayer also failed to deliver the desired results, sending the stock down 19 percent in the past 12 months.

The continued fall in stock price attracted the ire of activist investors such as Starboard whose CEO Jeff Smith demanded a sale of the company. In February, Yahoo said it would explore "strategic alternatives alongside its continued consideration of a reverse spin."

Peck said, "[H]ence we believe Yahoo's core can be sold for $6-8B, which is accretive to shareholders (even after taxes) given its negligible public value today," Peck commented, while adding that the bidding process is likely to be robust, on account of the "underlying value of the pieces."