Although the new Verizon would be No. 3 in the $60 billion USA market for digital advertising, “one shouldn’t delude themselves into thinking that it’s a close third place”, MoffettNathanson analyst Craig Moffett said.
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It will merge Yahoo with AOL, for which it paid £3.4bn previous year.
Expected to be finalized early next year, the all-cash deal will expand Verizon’s portfolio of digital media brands with the addition of Yahoo’s online news, finance and sports properties.
It totals to US$162.1 million (A$216.56 million), however, if Mayer is made to leave Yahoo within a year of a “change-in-control”, according to provisions of her contract with the company, Equilar reckons the current value of what the female CEO would be eligible to receive another US$56.8 million (A$76 million).
YAHOO: Shares in Yahoo, the original Internet giant, fell $1.06, or 2.7 percent, to $38.32 after the company announced Verizon would buy its advertising, media and email businesses for $4.8 billion.
In a statement, Verizon said it expects the deal to close in the first quarter of 2017, subject to approval of Yahoo shareholders and regulators. Later in the year, Google went public and Yahoo began selling some of the stock that it received in its rival as part of the 2000 search engine deal and a legal dispute over alleged patent settlements.
“Today’s announcement not only brings us an important step toward separating Yahoo’s operating business from our Asian asset equity stakes, it also presents exciting opportunities to accelerate Yahoo’s transformation”, Mayer said, noting that the deal “culminates a rigorous, thorough process over many months, and yields a great outcome for the company”.
Following the sale of Yahoo to Verizon, Yahoo Japan could also be up for sale.
Mayer’s future role with Yahoo was unclear. Meanwhile, Mayer says she will stay on to see Yahoo through its transition.
Yahoo was under pressure from shareholders who were critical of the company’s financial performance over the past eight years.
Verizon Communications Inc.’s planned $4.83 billion acquisition of Yahoo Inc. represents a bet that the troubled web portal will give the largest USA wireless carrier a leg up in expanding its audience as it diversifies away from being a telephone and internet provider.
BONDS, CURRENCIES: U.S. government bond prices rose.
Chief Executive Jerry Yang, a Yahoo co-founder, quit a few months later, and the company has had three CEOs since then.
It appears at first glance to be an ignominious fate for Yahoo, the internet pioneer which has always been one of the best-known names in Silicon Valley.
Some analysts said the deal was beneficial to Verizon’s digital media strategy, but not substantially so given the size of the combined operations.
Bob O’Donnell of the consultancy Technalysis Research agreed that Verizon will want to keep the Yahoo brand which is recognized worldwide, at least for the near term.
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Little will be left of Yahoo, it seems, apart from a 35.5 percent stake in Yahoo Japan and 15 percent of Chinese e-commerce company Alibaba, worth US$41 billion.
