Inc.’s operating business for $4.8 billion in cash.
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The transaction is subject to customary regulatory approvals and closing conditions, including the approval of Yahoo’s stockholders, and is expected to close in the first quarter of 2017.
It’s the end of Yahoo (YHOO) as we know it with Verizon (VZ) buying the Internet company for a fraction of what it once was worth.
The research firm eMarketer estimated that Yahoo’s share of the digital advertising market would fall this year to around 1.5 per cent, with Google getting some 30 per cent and Facebook 12 per cent.
Mayer said in a CNBC interview that she hopes to stay on as CEO of Verizon, though her future with the company remains uncertain.
With the sale of its core, Yahoo will be left as a separate investment company that will change its name after the transaction.
“The acquisition of Yahoo! will put Verizon in a highly competitive position as a top global media company and help accelerate our revenue stream in digital advertising”, said Verizon Chief Executive Lowell C. McAdam in a statement.
Shares of Yahoo increased 145% under Mayer, but that was mainly due to factors she had little to do with, such as the rising value of the company’s stakes in Chinese e-commerce site Alibaba (BABA) and Yahoo Japan that were acquired before Mayer arrived.
At its peak, on January 3, 2000, Yahoo had a market cap of 8 billion, more than twice that of Walt Disney Co.
On July 23, Verizon Communications Inc. entered into a stock purchase agreement with Yahoo!
“For Verizon, this combination should create a powerful rival to Google and Facebook in mobile media, and an open, scaled alternative offering for advertisers and publishers”.
Under pressure from activist investor Starboard Value LP, Yahoo launched an auction of its core business in February after shelving plans to spin off its stake in Alibaba.
Once Verizon has merged AOL and Yahoo, Mahaney added, the result will be a “combined asset that will still amount to maybe a high single-digit percentage of all ad revenue out there, and it’s a flatlining or even a declining percentage”.
Verizon is the largest wireless communication service provider in the USA, and with the purchase of Yahoo, now stands as the sole purveyor of two of the biggest dot-com era internet businesses.
She also praised the deal as an opportunity for Yahoo, once one of the the most valuable companies in the world, to “build further distribution and accelerate our work in mobile, video, native advertising, and social”.
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Technology analyst Jack Gold of J. Gold Associates said the deal makes sense with companies such as Verizon and AT&T seeking to move beyond their role as mere carriers.
