Verizon Communications Inc (VZ.N) said on Monday it would buy Yahoo Inc’s (YHOO.O) core internet properties for $4.83 billion in cash to expand its digital advertising and media business, ending a protracted sale process for the fading Web pioneer.
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Verizon’s deal for Yahoo could give the phone company a stronger foothold in digital advertising as it takes what it knows about its customers’ whereabouts and combines that with Yahoo’s popular destinations and AOL’s advertising expertise. The company will now only continue to reach even more consumers with Yahoo’s services.
“Seven West Media will have an opportunity, in the period between being formally notified of a transaction and final completion, to consider which options it selects or a combination as may be negotiated with the new owners of Yahoo, Inc that creates the most value for Seven West Media shareholders”.
The long-awaited deal positions the company to compete as more than just an access provider, and with its purchase of AOL for $4.4 billion past year, it seems the company is building a digital media and advertising platform that may be able to compete with the likes of Facebook and Google.
Verizon could drive more traffic by loading Yahoo apps on Android phones, although Apple forbids this on iPhones.
The company has been the subject of speculation about its future as far back as 2008, when Microsoft made an unsolicited bid to buy the firm for around $US44.6 billion ($60 billion), which was rejected at the time for undervaluing the company.
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. The Sunnyvale, California, company also has a patent portfolio that it intends to sell, and about $7.7 billion in cash. A spokesman for Yahoo said it’s “too early to say” whether she will stay on as CEO, accept a new role at Verizon, or step aside.
Mayer, 41, is the latest in a succession of Yahoo CEOs who could not engineer a comeback. “It’s important to me to see Yahoo into its next chapter”. Yahoo’s annual revenue, after subtracting ad commissions, has declined by about 20 percent from $4.4 billion before Mayer’s arrival to a projected $3.5 billion this year.
The company was founded in 1994 by two Stanford University students, Jerry Yang and David Filo, as “Jerry and David’s Guide to the World Wide Web”.
The sale could result in thousands of layoffs as Verizon eliminates overlapping jobs and services in Yahoo and AOL. To make matters worse, Yahoo failed to recognize the importance of social networking and was slow to make the leap into mobile devices such as smartphones and tablets.
Bloomberg first reported the deal would be announced on Monday for $4.8 billion.
It’s official: Yahoo’s days as an independent company are over.
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“You will see the Yahoo brand but Yahoo as a company pretty much does go away”, said Bob O’Donnell of Technalysis Research.
