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Verizon, TPG, YP Holdings All Want Yahoo; Company Warns Of Search Engine Revenue Drop

Verizon, TPG, YP Holdings All Want Yahoo; Company Warns Of Search Engine Revenue Drop

According to a report by Bloomberg, Yahoo! Inc. (NASDAQ: YHOO) is likely talking with just three players to sell its Internet assets.

Bloomberg, citing "people familiar with the matter," stated that Verizon Communications Inc. (NYSE: VZ) is battling with the private equity firm TPG and the digital-advertising business YP Holdings.

Bloomberg suggested that Yahoo's Internet properties is a "strategic investment" for Verizon, and it will likely combine the Internet assets with AOL. The telecommunication company is believed to be working with at least three financial advisers on a potential Yahoo bid.

Related Link: Thought Piece: Do Investors Really Care What Happens To Yahoo?

More than 1 billion people use Yahoo's e-mail service or browse its finance, sports and video sites. This would represent a "prized asset" for Verizon to mix with its more than 112 million wireless subscribers.

YP Holdings is also working with bankers to "investigate a variety of strategic alternatives, which would include acquiring smaller firms or selling itself," Bloomberg also reported. The company's relatively small size makes it an ideal candidate for a Reverse Morris Trust, which would involve a tax-free merger with a spun-off subsidiary of Yahoo's core business.

Meanwhile, the New York Post is reporting that Yahoo is "predicting painful revenue drops" in its core search and display-ad business this year – a "grim outlook" that has "frightened away" many potential buyers for the declining assets.

Shares of Yahoo were trading lower by 0.03 percent ahead of Tuesday's market open.

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