Verizon to acquire Yahoo in US$4.8 billion dollar deal

Basking Ridge, N.J.-based telecommunications firm Verizon Communications Inc. plans to acquire Internet search and media company Yahoo Inc. for $4.83 billion USD in cash, the U.S. organizations announced this morning.

In a press release issued by Verizon, the carrier emphasized Yahoo’s 600 million monthly active mobile users. The acquisition follows Verizon’s purchase of AOL Inc. last year, giving it a broad base of online media properties and a digital revenue pipeline comparable to other leading firms in the space.

Yahoo’s operating business will be integrated with AOL’s and led by Marni Walden, executive vice president of the product innovation and new business organization at Verizon.

Yahoo CEO Marissa Mayer’s role post-acquisition hasn’t been made clear. According to the Wall Street Journal, she stands to make more than $50 million in compensation if she’s out of a job after the sale, after earning $100 million in cash and equity.

According to company executives speaking on an investors’ call held early Monday morning, Yahoo will require a shareholder vote, and the SCC must give its blessing on the deal. The deal has no performance conditions required to close, and is expected to be completed in the first quarter of 2017.

Mayer said Yahoo’s mobile tools and web properties are of high quality and that the company is proud of them. With Verizon’s network, the hope is they’ll find an even wider audience to put them to use.

“One of the key issues for us is engagement, and particularly mobile engagement,” Mayer said. “For us, it’s about how do we get more distribution?… we think Verizon and its distribution on mobile will be very helpful.”

Not included in the acquisition are Yahoo’s cash assets (which it plans to distribute to shareholders), its shares in Alibaba Group Holdings, a collection of non-core patents known as the “Excalibur Portfolio,” and Yahoo Japan. What remains of Yahoo after the acquisition deal closes will transform into a publicly-traded investment company and change its name. Verizon plans to continue to operate the Yahoo brand.

Yahoo first became known as a search engine and content website in the 1990s, peaking in its size at the height of the dot-com boom in the early 2000s with a market capitalization of $125 billion. In the years since, competition for digital advertising channels has resulted in two of its competitors – Google and Facebook – dominating the market, leaving Yahoo just a 3.4 per cent share of digital ad spending in the U.S. annually, according to eMarketer. Between 2014 and 2016, Yahoo’s digital ad revenues slipped 8.7 per cent.

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Brian Jackson
Brian Jackson
Former editorial director of IT World Canada. Current research director at Info-Tech

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