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Yahoo ‘Core’ Fetching $5 Billion Bids, Report Says

June 9, 2016, 3:06 PM UTC

The latest round of bids for Yahoo’s “Core” business are in—and they’re about what we expected.

Yahoo (YHOO) has received several bids for its core business, which includes search, advertising, and certain news verticals, CNBC‘s David Faber is reporting, citing sources who claim to have knowledge of the auction. Many of the bids valued Yahoo Core at $5 billion or more, though Verizon (VZ), which has long been tapped as one of the most interested companies in Yahoo’s operation, could only muster $3.5 billion in the latest bidding round, Faber’s sources say.

Speaking on CNBC’s Squawk On the Street” on Thursday, Faber said that Yahoo’s board will convene a special session on Friday to discuss the bids on its core operation. However, the company has made clear to bidders that this bidding round is just the second, and it will be followed by a third and “final” round once the board has the opportunity to review the latest bids. Faber said on the show that the final round will start next week and end by the middle of July, giving the companies Yahoo chooses one more month to present their best offers before the company makes a decision.

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It wasn’t supposed to be this way for Yahoo. After hiring Marissa Mayer in 2012 as chief executive, Yahoo’s board was hopeful that she could turn things around. Mayer moved swiftly, acquiring popular microblogging service Tumblr, hiring big names in news, like Katie Couric, and more. Along the way, Yahoo’s core business continued to falter as competitors like Google (GOOGL) and Facebook (FB) gained more users and more interest from advertisers. Before long, activist investors, including Starboard Value, were calling for Mayer’s ouster.

Meanwhile, the board was trying to figure out what to do with Yahoo. The board last year announced a plan to divest the company’s more than $30 billion stock value in Alibaba (BABA) and spin it off into a new company. But after investor concerns that the move could create a major tax bill that would hurt Yahoo’s shareholders, and growing discontent with the direction of the company, the board decided to nix the plan and consider a possible sale. In February, Yahoo officially formed a strategic committee to explore its options.

Since then, the board has remained steadfastly behind Mayer, who board members say has a plan in place to revitalize the once-giant Internet company. However, those moves have included shuttering several divisions and laying off thousands of people. Even then, Yahoo appears to be in trouble.

In a sign that the board was starting to bow to Starboard’s pressure, the company’s board in April announced that it was shaking things up and adding four new independent directors aboard. Chief among them was Starboard Value CEO Jeffrey Smith, Mayer’s chief critic and the most outspoken supporter of the sale of Yahoo’s core business.

While Yahoo has been entertaining bids, it’s also been exploring other ways to get some value out of its company. This week, for instance, The Wall Street Journal reported that Yahoo had hired an investment bank to sell approximately 3,000 patents. Those patents are valued at $1 billion.

However, whether that is such a smart move now remains to be seen. As Faber noted, Verizon’s bid was much lower than some of the others because it had little to no interest in Yahoo’s patents or real estate. The other bids include the company’s intellectual property. Selling those patents, in other words, could sour Yahoo’s bids and potentially reduce its selling price.

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That said, actually determining a value for Yahoo can be difficult, to say the least. While the company’s market cap is currently $35.7 billion, that’s nearly entirely made up of its stakes in Alibaba and Yahoo Japan. Yahoo Core, then, is viewed by some to be nearly worthless.

However, other analysts have said that when the fat is stripped away, Yahoo Core actually has significant value. In December, in fact, Fortune surveyed analysts to see how much they believed Yahoo Core was worth. Their assessment? Between $5 billion and $8 billion, including patents and intellectual property.

If Faber’s report is true, those analysts were spot on. But as he noted on CNBC, the last round of bids can be rocky and valuations can shift dramatically is a short period of time.

Faber also had one other surprising revelation during his talk on CNBC. Yahoo’s board is deciding whether to keep Verizon in the mix. Although that company, which also acquired AOL for similar reasons (to get its hands on the company’s content and advertising), has shown the most public interest, its bid was so much lower than those from private equity firms and other companies, Yahoo’s board needs to decide whether it should be allowed in the final bidding round.

Whatever the case, Yahoo Core appears to be fetching what analysts had hoped it would, and it’s entirely possible the company gets more than $5 billion when it’s all said and done.

Yahoo did not immediately respond to a request for comment.