YP Holdings, the parent company of YellowPages.com, is preparing for an initial round proposal to merge with the U.S.-based search engine firm, Yahoo. The advertising firm that is managed by Cerberus Capital Management is worth between $1 billion and $1.5 billion. Currently, YP holdings along with Goldman Sachs is exploring a range of strategic options like purchasing smaller companies or selling itself.
With regard to this tax-free merger transaction, YP holdings would unite with a divested unit of Yahoo's key business, Bloomberg reported citing unidentified sources with knowledge of the matter. The print advertising unit, previously called as YellowPages.com, was divided in 2015 and is presently known as Print Media Holdings.
Cerberus that purchased a majority stock in the print directories unit in 2012 from AT&T for $950 million now owns 53% of YP. AT&T, which currently holds 47% of YP, has planned to vote against the merger proposal for Yahoo. But if YP continues with its effort to purchase Yahoo, AT&T would have to acquire part of the search engine firm.
Meanwhile, NEW YORK POST reported that Yahoo is anticipating an 11% drop in revenue from its key and display advertising units in 2016. The gloomy forecast has scared many potential buyers, who have decided to stay away from the company. On a GAAP basis, revenue from search business is expected to decline to roughly $1.9 billion in 2016, from $2.08 billion in the previous year.
Revenue from display-ad is anticipated to decline to nearly $2 billion in 2016 from $2.074 billion reported last year. Moreover, income from conglomerates is expected to plunge to $539 million in the current year from $808 million in 2015. Yahoo was anticipated to receive an offer from buyers like Verizon and private equity companies like Bain Capital and TPG.
Revenue, including traffic-acquisition expenses, is anticipated to squeeze by roughly 15% to $3.5 billion in 2016 from $4.1 billion in the previous year, according to a Recode report. In addition, 2016 EBITDA outlook is reduced to $750 million from $950 million in 2015.
According to BUSINESS INSIDER, YP Holdings employs more than 3,300 marketing representatives in the U.S., which would aid the sell ads over Yahoo's monthly guests of more than 1 billion. Analysts say that Yahoo's key web business is valued at least $6 billion.
YP is one among the largest digital advertising firms in the U.S. The merger deal from YP could influence Yahoo's shareholders if the cash offer from bigger firms, like Verizon Communications, fail to lure the web company's investors. The deadline for companies to submit their proposal for Yahoo had been set on April 18. However, YP, Yahoo, GoDaddy, AT&T and Cerberus did not comment on the report.
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