Dan Gilbert, AT&T Each Bid $5 Billion for Yahoo, Patents

Dan Gilbert, AT&T Each Said to Bid $5 Billion for Yahoo
  • Gilbert said confident in chances of winning Yahoo auction
  • Yahoo board hasn’t met to decide who will make final round

Dan Gilbert, the founder of Quicken Loans Inc. and owner of the Cleveland Cavaliers basketball team, and AT&T Inc. each bid about $5 billion for Yahoo Inc.’s core business, patents and real estate assets, people with knowledge of the matter said.

Verizon Communications Inc. made an offer between $3.5 billion to $4 billion for only Yahoo’s core business, according to two people familiar with that situation, who asked not to be identified because the information is private.

Verizon didn’t bid on the intellectual property and real estate because Sunnyvale, California-based Yahoo told the company it wished to sell them separately, one of the people said. Verizon is willing to buy both the patents and real estate, the person said. Yahoo is planning to sell more than 3,000 patents, according to a statement earlier this week.

The New York-based telecommunications company expects to be given a chance at the end of Yahoo’s sale process to match or top any superior bid, two of the people said. While Yahoo has discussed eliminating Verizon before the last round, according to those people, Yahoo’s board hasn’t met yet to decide which ones to leave out, another person said. The board will meet soon to discuss the proposals, the person said.

New Management

Gilbert, whose bid is backed by Warren Buffett, isn’t looking for more outside financing, said one of the people. Despite limited synergies with mortgage-lending company Quicken, Gilbert is confident in his chances of winning, the person said. He’s working with former Yahoo executives and believes Yahoo can be a good investment with new management, the person said.

Private equity firm TPG is still involved in the bidding and has had preliminary discussions with several strategic partners in case it needs to increase its offer, one of the people said.

Yahoo, which began a strategic review of the company in February, accepted first-round proposals in April, attracting offers that ranged from about $4 billion to $8 billion, people familiar with the matter said at the time. The company received more than 10 bids, people familiar have said.

Spokesmen for Yahoo, Verizon and TPG declined to comment. Representatives for Gilbert and AT&T didn’t immediately respond to requests for comment.

For a company primer on Yahoo, click here.

On May 24, Chief Financial Officer Ken Goldman said the process is robust and “well along the way,” without giving specifics. Second-round bids were submitted this week, and after a final round of proposals, a winner could be chosen early next month, people familiar with the matter have said.

Chief Executive Officer Marissa Mayer, who joined the company nearly four years ago, has failed to spark a turnaround, with sales showing little growth and adjusted earnings on the decline. The company is considering offers as it grapples with rising competition from younger rivals including Alphabet Inc.’s Google and Facebook Inc.

Yahoo’s disappointing financial results have drawn the ire of investors, most notably activist Starboard Value LP. The company averted a proxy war in April when it agreed to place four new members on the board, including Starboard CEO Jeffrey Smith.

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