Tim Armstrong, the CEO of Verizon-owned AOL, said he has “enormous respect for what Yahoo has accomplished” and that integrating the two former internet powerhouses will “create a new powerful competitive rival in mobile media, and an open, scaled alternative offering for advertisers and publishers”.
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Neither company said much about the brand’s future once the $4.83 billion deal closes early next year. Those investments, made more than a decade ago, have been the most valuable pieces of Yahoo throughout Mayer’s tenure.
Yahoo investors have been focused on this part of the business for years, and Yahoo’s failure to spin them off without tax penalties was a factor in its decision to seek a buyer for the rest of the business amid an activist revolt.
The Verizon deal would transform Yahoo into a holding company, with a 15 percent stake in Chinese e-commerce company Alibaba Group Holding Ltd (BABA.N) and a 35.5 percent interest in Yahoo Japan Corp (4689.T) as well as Yahoo’s convertible notes, certain minority investments and Yahoo’s noncore patents.
Here’s what’s known – and what isn’t – about what Verizon’s deal for Yahoo means for you.
The Silicon Valley web pioneer was put up for sale in February and garnered multiple bids from big time companies including AT&T; private equity firms TPG and Vector Capital Management; and Quicken Loans founder Dan Gilbert with financial support from Berkshire Hathaway CEO Warren Buffett.
“Until completion of any change of control of Yahoo, Inc, which Seven West Media understands may take six to nine months in the nature of large and complex transactions, it is business as usual at Yahoo7 here in Australia and New Zealand”.
Barclays said last month Verizon could save $500 million a year in costs of acquiring internet traffic and other expenses by buying Yahoo’s internet business.
It’s quite possible that Verizon will retain the Yahoo brand – as a sub-brand like AOL. “It’s important to me to see Yahoo into its next chapter”, she said in a letter to the employees. Co-founders Jerry Yang and David Filo began building a web directory as Stanford University graduate students in 1994, and Yahoo quickly established itself as the online hub for tens of millions of people.
“The Yahoo brand still holds a lot of consumer-affinity” and could help Verizon overcome the lukewarm feelings that many subscribers have toward their wireless service providers, said Forrester Research analyst Shar VanBoskirk.
Reuters reported on Friday that Verizon had emerged as the front-runner in the Yahoo auction. Facebook and Google are forecast to deliver sales of $10.3 billion and $24.63 billion, respectively, by the end of this year. It also proved internet companies could be profitable as other dot-com startups burned through millions of dollars.
Verizon is now expected to combine Yahoo!’s search, email and messenger assets with AOL’s advertising technology tools, which analysts say will give the top wireless operator in the USA a significant foothold in the digital advertising market.
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The move will also mean Yahoo becomes integrated with AOL, which has invested heavily in media companies such as The Huffington Post, TechCrunch and Engadget. It still needs approval from Yahoo shareholders.
