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Yahoo-Verizon Deal to Go Ahead — With $350M discount

Yahoo Sunnyvale headquarters. (Y! Photo / Brian McGuiness)

Yahoo has saved its deal with Verizon by slashing $350 million from the $4.83-billion sale price of its Internet division.

Now valued at approximately $4.48 billion in cash, the deal is expected to close in the second quarter of 2017. The price reduction is a far cry from the $1-billion discount Verizon was reportedly pushing for late last year.

The companies will share some of the legal and regulatory liabilities arising from the two major data breaches that affected more than 1.5 billion Yahoo accounts, the firms announced in a joint press release. While the companies will equally split any cash liabilities arising from government investigations and third-party litigation related to the breaches, liabilities arising from shareholder lawsuits and SEC investigations will be the sole responsibility of Yahoo.

Marni Walden
Marni Walden

“The amended terms of the agreement provide a fair and favorable outcome for shareholders. It provides protections for both sides and delivers a clear path to close the transaction in the second quarter,” Marni Walden, Verizon executive vice-president and president of product innovation and new businesses, said.

“We have always believed this acquisition makes strategic sense. We look forward to moving ahead expeditiously so that we can quickly welcome Yahoo’s tremendous talent and assets into our expanding portfolio in the digital advertising space.”

Walden’s statement is also a significant change from the doubts she expressed last month about the deal going ahead. When asked at the beginning of January if the transaction would still occur, she was quoted by Reuters as saying: “I can’t sit here today and say with confidence one way or another because we still don’t know.”

Marissa Mayer
Marissa Mayer

Yahoo and Verizon struck the $4.83-billion all-cash deal last July and all appeared rosy for the tech titan who had been trying for months to spin off of its core Web business — which includes search, mail and messenger. The deal pleased Yahoo shareholders who were unhappy with Yahoo’s slow turnaround process under CEO Marissa Mayer.

When Yahoo admitted in September to a 2014 data breach impacting 500 million user accounts, its deal with Verizon appeared to be shaky. Then, in December, when Yahoo admitted to a hack in 2013, this time affecting one billion accounts, the deal appeared to be in genuine peril.

While it is uncertain how much rumor mongering played a role in media reports of the deal being scrapped, it is safe to say that Mayer must be breathing a sigh of relief that the transaction is back on track.

“We continue to be very excited to join forces with Verizon and AOL,” Mayer said. “This transaction will accelerate Yahoo’s operating business especially on mobile, while effectively separating our Asian asset equity stakes. It is an important step to unlock shareholder value for Yahoo, and we can now move forward with confidence and certainty. We have a terrific, loyal, experienced team at Yahoo. I’m incredibly proud of our team’s strong product and financial execution in 2016, setting the stage for a successful integration.”

While the deal is set to be wrapped up in the next few months, the fallout from Yahoo’s data breaches could stretch on for some time.

The U.S. Securities and Exchange Commission announced last month it is investigating Yahoo for its failure to promptly report two massive hacks of its systems to its investors. The SEC has probed the actions of other firms in similar situations, although the agency has yet to take action against a company.

About the author


Jennifer Cowan

Jennifer Cowan is the Managing Editor for SiteProNews.