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Verizon to Purchase Yahoo’s Internet Division in $4.83B All-Cash Deal

Image by Sebastian Bergmann.

The race to acquire Yahoo is over and wireless giant Verizon is the winner.

The company has agreed to acquire Yahoo’s Internet business for $4.83 billion in cash, an investment in Verizon’s digital advertising and media business.

The purchase comes as no surprise. Verizon is keenly interested in the Internet giant’s advertising technology tools such as BrightRoll and Flurry.  Assets such as search, mail and messenger, however, could also come in handy when combined AOL, which Verizon acquired in June 2015 for $4.4 billion.

“Just over a year ago we acquired AOL to enhance our strategy of providing a cross-screen connection for consumers, creators and advertisers,” Verizon CEO Lowell McAdam said.

“The acquisition of Yahoo will put Verizon in a highly competitive position as a top global mobile media company, and help accelerate our revenue stream in digital advertising.”

Marissa Mayer
Marissa Mayer

Once the deal closes, likely in the first quarter of 2017, Yahoo will be integrated with AOL under Marni Walden, EVP and president of the product innovation and new businesses organization at Verizon.

Yahoo CEO Marissa Mayer is calling the deal a no-brainer.

“Yahoo and AOL popularized the Internet, e-mail, search and real-time media,” Mayer said. “It’s poetic to be joining forces with AOL and Verizon as we enter our next chapter focused on achieving scale on mobile. We have a terrific, loyal, experienced and quality team, and I couldn’t be prouder of our achievements to date, including building our new lines of business to $1.6 billion in GAAP revenue in 2015. I’m excited to extend our momentum through this transaction.”

Once the Yahoo acquisition becomes official, Verizon will boast one of the largest portfolios of owned and partnered global brands. AOL and Yahoo together will have more than 25 popular brands in its portfolio. Yahoo’s key assets include its finance, news and sports content as well as its popular e-mail service, serving roughly 225 million monthly active users.

The announcement of the deal brings an end to months of searching for the right buyer. Mayer, at the beginning of February, announced the spin off of Yahoo’s core Web business and, not long after that, the bidding began.

Aside from Verizon, other companies thought to be in the running included AT&T, Microsoft, IAC, CBS, The Daily Mail and Time, to name a few. Approximately 40 companies in total expressed interest in purchasing Yahoo’s core Internet business.

The sale will please many Yahoo shareholders, such as activist investor Starboard Value LP, which had been calling on the board to fire Mayer and her top executives for a number of months.

Mayer took over the reins four years ago and has made a lot of changes to make Yahoo more modern and hip. She has overhauled Yahoo’s look and focus and has fixed a myriad of problems. On the other hand, she also spent a lot of money acquiring numerous small start-ups , mostly for the talent it brought to the company.

If Mayer is given the boot after the company is sold, and she likely will be, it is estimated she will be laughing all the way to the bank with a $59-million payout.

Mayer, after the sale was announced this morning, penned an e-mail memo to her employees that reflected on all the positives of the past and those to come in the future.

 

 

“The strategic process has created a lot of uncertainty, but our incredibly loyal and dedicated employee base has stepped up to every challenge along the way,” she said. “Through the first half of the year, we met our operational goals and overachieved on plan. But, further, there are things that you cannot measure, like the passion of the people behind the products. The teams here have not only built incredible products and technologies, but have built Yahoo into one of the most iconic, and universally well-liked companies in the world. One that continues to impact the lives of more than a billion people. I’m incredibly proud of everything that we’ve achieved, and I’m incredibly proud of our team. For me personally, I’m planning to stay. I love Yahoo, and I believe in all of you. It’s important to me to see Yahoo into its next chapter.”

 

About the author

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Jennifer Cowan

Jennifer Cowan is the Managing Editor for SiteProNews.

3 Comments

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  • This is a real sad day for many at Yahoo. There was a time when they had everything in their hands. There was a time when Internet word was connected with Yahoo, and everyone loves to visit it. And yet, here we are.

  • Microsoft’s 2008 offer was $31 per share. Considering Yahoo is not in quite as favorable of a market position as it was in 2008… Verizon probably overpaid.