Why Verizon Communications Inc. (NYSE:VZ) Is A Perfect Fit For Yahoo! Inc. (NASDAQ:YHOO)’s Internet Business?

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Verizon Communications Inc. (NYSE:VZ)

The internet business of Yahoo! Inc. (NASDAQ:YHOO) looks set to end up in Verizon Communications Inc. (NYSE:VZ). Given that the carrier is looking to bolster its internet presence, the tech giant’s internet assets could help it achieve that.

Verizon’s Buy Case

Verizon Communications Inc. (NYSE:VZ) would be a good for Yahoo’s Internet assets given that they could go a long way in supplementing AOL’s advertising operations. The wireless company has been bolstering its prospects on this front, having already acquired Microsoft Corporation (NASDAQ:MSFT)’s advertising technology.

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A $250 million deal for Millennial Media and a launch of mobile video service go90 further affirms the company’s intentions of becoming a major internet player.

Another reason why Verizon would be a good home for Yahoo is the fact that it could be allowed to operate independently like AOL. Recon Analytics analyst, Roger Entner, is however skeptical of the hands-free approach given Yahoo’s size.

Calls for AOL-Yahoo Merger

Activist investors have over the years pushed for a Yahoo-AOL merger. As it stands, they could get their wish with Verizon looking to enter the bidding process. Such a merger according to industry experts could help the embattled search giant rediscover its footing in the advertising business.

However, for the merger to be successful, Tim Armstrong would have to be at the helm as the advertising head. Armstrong is highly regarded in the advertising community after a successful stint at Google. His tenure at AOL has also been a successful one, having reinvigorated the company’s growth prospects. His good M&A and solid ad tech stack could also be of great benefit to Yahoo.

Verizon first showed interest in Yahoo’s Internet assets last year. The company’s plans could become clear in the next few weeks with the opening of the bidding process.

Yahoo! Inc. (NASDAQ:YHOO) Internet assets as its stands are Verizon’s to lose. That is in part because it is not interested in Alibaba Group Holding Ltd (NYSE:BABA) and Yahoo Japan stakes.

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