UBS Discounts Potential Bidding War For AOL

AOL, Inc. (NYSE: AOL) is unlikely to see additional bidders step forward to challenge its $50 per share acquisition by Verizon Communications Inc. (NYSE: VZ), an analyst said Thursday.

AOL changed hands recently at $50.59, down $0.18.

UBS' Eric J. Sheridan said it's "unlikely" that another bidder will emerge, "although we cannot completely rule out the possibility."

Sheridan downgraded AOL to Neutral with a $50 target and said the Verizon deal will close within two to three months.

Although AOL's stock price suggests the market is discounting higher bids, speculation continues that Yahoo! Inc. (NASDAQ: YHOO) might still step in.

Yahoo's $5.7 billion of net cash would be "sufficient to make an attractive over-bid," even assuming a $132 million, breakup fee, Gabelli's Brett Harriss wrote in Barron's on Wednesday.

Harriss noted that several activist investors have previously pushed for an acquisition by Yahoo of AOL, estimating $750 million in potential cost synergies.

Besides Yahoo, potential counter bids might conceivably come from Time Warner Cable Inc. (NYSE: TWC), Comcast Corporation (NASDAQ: CMCSA), Alibaba Group Holding Ltd (NYSE: BABA) and others, unidentified traders told Business Insider recently.

Sheridan, who discounts a bidding war, said AOL sees its acquisition by Verizon as an opportunity to jump-start its scale in mobile advertising.

The combination with Verizon provides AOL with access to 1.5 billion PCs, TVs & mobile devices and a broader pool of data AOL's advertising technology, Sheridan said.