Several other bidders have been in talks, according to reports, including Quicken Loans founder Dan Gilbert, who is being backed by billionaire Warren Buffett. The deal also could spell an end of the tenure of Yahoo’s high-profile CEO Marissa Mayer.
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“The sale of our operating business, which effectively separates our Asian asset equity stakes, is an important step in our plan to unlock shareholder value for Yahoo”, said Yahoo CEO Marissa Mayer.
Yahoo Inc. agreed to sell its main web businesses to Verizon Communications Inc. for $4.8 billion, ending a two-decade run as an independent company that took it from Stanford University startup at the dawn of the internet age to also-ran behind nimbler online rivals such as Google and Facebook Inc. “Our mission at AOL is to build brands people love, and we will continue to invest in and grow them”, he said in a press release.
In its statement Verizon has not clarified whether in the new Yahoo, which will be merged with AOL, whether Mayer will have any role or not.
“It’s the eyeballs that generate the advertising, you have to get to that viewership to get the advertisers to advertise, and that’s the model that we have to follow”, said Verizon CFO Francis Shammo at an investment conference in May in response to a question about Yahoo’s appeal. Verizon is buying Yahoo’s real estate, along with the online operations. It did not appear to purchase Yahoo’s patents, which some analysts suggested during the bidding process were valuable.
The sale does not include Yahoo’s cash, its shares in Chinese e-commerce giant Alibaba Group Holding Ltd, shares in Yahoo Japan, Yahoo’s convertible notes, certain minority investments or Yahoo’s non-core patents. If there is a victor of Yahoo’s patents, it remains to be seen who that is and how much they will pay.
Verizon has made a string of acquisitions in an apparent effort to move beyond a telecom provider into a media-and-mobile-advertising powerhouse that can compete with Google. “Yahoo will be integrated with AOL under Marni Walden, EVP and president of the product innovation and new businesses organization at Verizon”. Revenue of its MaVeNS division (mobile, video, native and social), which accounts for more than 30% of Yahoo’s revenue, rose 25% last quarter.
If Verizon fully owned Yahoo right now, it would generate about $3.6 billion in U.S.ad revenue this year to eclipse Microsoft for third place in the market, based on eMarketer’s estimates.
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While Verizon also wants Yahoo’s ad services, it is also prizes the hordes that still regularly visit to pick up their email, check the weather and catch up on current events, celebrity gossip and the stock market.
