The purchase will boost Verizon’s AOL internet business, which it bought a year ago for $4.4bn, as it gains access to Yahoo’s ad technology tools, BrightRoll and Flurry, and search, mail and messenger assets.
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Yahoo will be integrated with AOL under the Product Innovation and New Businesses organization at Verizon, according to a statement by Verizon on Monday.
She told a conference call that Verizon “offers significant strategic alignments in Yahoo’s focus on informing, connecting and entertaining our users”.
“The sale does not include Yahoo’s cash, its shares in Alibaba Group Holdings, its shares in Yahoo Japan, Yahoo’s convertible notes, certain minority investments, and Yahoo’s non-core patents”, said the release.
These assets will continue to be held by Yahoo!, which will change its name at closing and become a registered, publicly traded investment company.
The crux of the move will see Verizon merge Yahoo with AOL, which it bought previous year for $4.4bn (£3.4bn).
He explained what Yahoo brought to the table when he wrote, “Specifically, Yahoo owns content that is most notably known for its popular sports, news, and finance properties as well as its email service”.
It looks like the reason Verizon has been so eager to acquire Yahoo is for their reach- combine that with the advertising prowess of Aol ( I know, you would never expect to read that sentence in 2016) -and you’ve got a powerhouse media company.
However, Mayer told employees Monday in an email that she intends to stay “to see Yahoo into its next chapter” without specifying for how long. “They’re third place in a two-player market. We have enormous respect for what Yahoo has accomplished”.
Alibaba, which appears not to be in any rush to do any deal, may decide to play ball with Yahoo to avoid having a proxy or shell company for its shares trading at a discount.
Yahoo first put itself up for sale in February and it fielded multiple bids from nearly 40 different types of buyers including AT&T; Quicken Loans founder Dan Gilbert with financial backing from Berkshire Hathaway CEO Warren Buffett; and private equity firms TPG and Vector Capital Management.
Yahoo posted a loss of $440 million on revenue of a little over $1.3 billion in the second quarter of this year. Verizon is buying Yahoo’s real estate, along with the online operations.
Yahoo’s stock fell $1.06 Monday to close at $38.32.
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.
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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”. It bought a 40 percent stake in Alibaba in 2005 for $1 billion and its current holding is now worth some $30 billion – the vast majority of Yahoo’s market value of around $37 billion. It also proved internet companies could be profitable as other dot-com startups burned through millions of dollars. Yahoo also brings with the sale advertisers with target audience via streamlined advertising technology stack which combines power of data, content and technology. Yahoo attempted to buy Google and Facebook in their formative years, but it was rebuffed and then later dwarfed by them.
