After holding a board meeting to review second-round offers, Yahoo was expected to start reaching out to bidders as early as yesterday to notify them whether they will make it to the next bidding round, sources said.
Verizon, the biggest US wireless carrier, is seeking to challenge AT&T, the second largest US wireless provider, in the third round of bidding, even though its latest offer was at the low end of the $3.5bn-$5bn (€3.1bn-€4.4bn) range of the second-round bids that came in last week.
A consortium led by Quicken Loans founder Dan Gilbert, and backed by Berkshire Hathaway chairman Warren Buffett, will also make it through to the final round.
Some private equity firms that had made it through to the second round will not be invited to submit third-round bids, it is understood. Not all offers involve exactly the same assets, with some bidders indicating they are not interested in some of the patents and real estate assets on offer.
Verizon is primarily interested in Yahoo’s advertising technology tools.
It has been examining how the other assets up for sale, such as search, mail and messenger services, could be combined with the corresponding businesses of AOL, which it acquired last year for $4.4bn.
AT&T has been seeking to catch up with Verizon in advertising technology as it seeks to expand in mobile video offerings.
Verizon is, however, still seen as being the favourite. Analysts said it can reap operational synergies that would allow it to cut more costs than private equity bidders could — and submit a higher bid in the end.
Also, compared with private equity firms, Verizon has a bigger cash hoard.
This could become a significant factor, as second-round bids did not include committed financing.
It has also been reported that many insiders remain sceptical about AT&T’s real appetite for Yahoo.
A sale of Yahoo’s internet assets would leave the company just owning a 35.5% stake in Yahoo Japan, as well as a 15% stake in Chinese e-commerce company Alibaba Group, which accounts for most of its value.
In December, Yahoo scrapped plans to spin off its Alibaba stake, after investors fretted over whether that transaction could have been carried out on a tax-free basis.