Yahoo selling core business for $4.8 bn to Verizon
San Francisco (AFP) – Yahoo has agreed to sell its core business to telecom giant Verizon for $4.8 billion, ending a 20-year run by the internet pioneer as an independent company, the firms announced Monday.
Verizon chief executive Lowell McAdam said Yahoo would be integrated into its recently acquired AOL unit to create “a top global mobile media company, and help accelerate our revenue stream in digital advertising.”
The acquisition, expected to close in early 2017, will exclude Yahoo’s cash, certain patent holdings, and its big share in China’s Alibaba Group and stake in Yahoo Japan.
The deal will, however, turn over the popular Yahoo News, Mail and other online services used by more than a billion people worldwide.
Yahoo will be left as a separate investment company that will change its name after the transaction.
Marissa Mayer, CEO of Yahoo, said in a statement: “Yahoo is a company that has changed the world, and will continue to do so through this combination with Verizon and AOL.”
She added that the deal separates the core Yahoo business from its Asian asset equity stakes, and “is an important step in our plan to unlock shareholder value for Yahoo.”
– Bringing synergies –
The deal comes with Yahoo, a onetime leader in the online space, coping with years of decline and struggling to keep up with rivals like Google and Facebook.
Mayer said in a blog post that Verizon “brings clear synergies to the table” with its goal of reaching a global audience of two billion by 2020.
“Yahoo’s products and brand will be central to achieving these goals,” she said.
“Joining forces with AOL and Verizon will help us achieve tremendous scale on mobile. Imagine the distribution challenges we will solve, the scale we will achieve, the products we will build, and the advertisers we will reach… It’s incredibly compelling.”
Yahoo will operate independently until the acquisition and then fall under the aegis of the AOL unit chief, Tim Armstrong, a former Google colleague of Mayer.
“Our mission at AOL is to build brands people love, and we will continue to invest in and grow them,” Armstrong said in the statement.
“Yahoo has been a long-time investor in premium content and created some of the most beloved consumer brands in key categories like sports, news and finance.”
He added that the combination “will create a new powerful competitive rival in mobile media, and an open, scaled alternative offering for advertisers and publishers.”
Mayer arrived in 2012 seeking to revitalize Yahoo, which at its peak had a market value of over $100 billion.
The company was founded in 1994 as “Jerry and David’s Guide to the World Wide Web,” and went public in 1996 in one of the most hotly anticipated stock offerings of the time — surging 270 percent in the first day of trading.
Yahoo remains a major force online, but has lagged its rivals in its ability to “monetize” its audience through advertising that is linked to customers’ browsing and other online activities.
The research firm eMarketer estimated that Yahoo’s share of the digital advertising market would fall this year to around 1.5 percent, with Google getting some 30 percent and Facebook 12 percent.
Several other bidders have been in talks, according to reports, including Quicken Loans founder Dan Gilbert, who was being backed by billionaire Warren Buffett.
But Verizon appeared to be the leading candidate because of its ability to integrate AOL’s advertising technology into Yahoo services.
Mayer has been under pressure from shareholders to “unlock” value for Yahoo, whose core business has been effectively held a zero or negative value.
Yahoo had a $37 billion market value at the end of trade Friday, but its Alibaba and Yahoo Japan holdings are estimated to be worth $40 billion or more.