Yahoo has agreed to sell its core business to telecom giant Verizon for $4.8 billion, ending a 20-year run by the internet pioneer as an independent company, the firms announced Monday.
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Verizon announced that it will acquire Yahoo’s operating business for about United States dollars 4.83 billion in cash. Yahoo’s Tumblr, alongside Flickr and its Mail, Search, News, Groups, Finance, and Fantasy Sports brands will now belong to Verizon, which also acquired AOL and The Huffington Post.
After the transaction is closed, Yahoo will be integrated with AOL under Marni Walden, its executive vice president and president of the Product Innovation and New Businesses organization at Verizon, the communications company said Monday.
Yahoo, founded in 1994, was a dominant player in the early days of the internet, but has long lost its leadership position in internet search and advertising to Alphabet Inc’s (GOOGL.O) Google, Facebook Inc (FB.O) and others. Past year it made a £3.4bn loss.
The merging of Yahoo’s online operations with AOL’s sets up a potential reunion between Mayer and Armstrong, who were both executives at Google for years. Facebook and Google are forecast to deliver sales of $10.3 billion and $24.63 billion, respectively, by the end of this year. Yahoo’s email service continues to be the second most-popular in the U.S. behind Google’s Gmail. However, Mayer’s future may be out of her hands.
Yahoo has under-performed even as advertisers have increased spending in what is now a $160 billion digital advertising market, according to the research firm eMarketer.
“Google and Facebook are doing such a good job executing”, said Armstrong, who helped lead Verizon’s successful bid for Yahoo.
Walden’s first task might be to find a role for Yahoo CEO Mayer. Mayer has more options to purchase more stocks valued at US$43.4 million (A$57.98 million) and she earned nearly another US$4 million (A$5.34 million) in stock for 2016.
Verizon, he said “is looking at ways to stay competitive primarily with AT&T” and that Yahoo gives it “the ability to expand into the online content arena” and a large base of users.
“I’ve tried to be gender blind and believe tech is a gender neutral zone but do think there has been gender-charged reporting”, she told the Financial Times.
The Alibaba and Yahoo Japan investments are worth about $40bn in terms of their market capitalizations, while Yahoo had a market value of about $37.4bn as of Friday’s close.
The price Verizon is paying for Yahoo’s internet assets is a small percentage of its market capitalization of over $125 billion during the peak of the dot-com boom, reflecting how badly the company has fallen out of favor.
“Yahoo is a company that has changed the world, and will continue to do so through this combination with Verizon and AOL”.
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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.
