The deal comes with Yahoo, a onetime leader in the online space, struggling to keep up with rivals like Google and Facebook.
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Yahoo will change its name at closing and become a publicly traded investment company.
The transaction is seen boosting Verizon’s AOL internet business, which the company acquired previous year for $4.4 billion, by giving it access to Yahoo’s advertising technology tools, as well as other assets such as search, mail, messenger and real estate.
“I love Yahoo and it’s very important to me to see it well into this next chapter”, she said in an interview.
The shares have more than doubled since Mayer became Yahoo’s CEO, largely because of the rising value of the Alibaba stake.
Yahoo also still has a patent portfolio that it intends to sell, and about $7.7 billion in cash.
Verizon makes most of its money from mobile phone connections while Yahoo generated more than twice as much revenue from search and display ads on desktop computers than it did from its so-called MAVENs businesses (Mobile, Video, Native and Social).
March: Sales fall 18 per cent in the first quarter to US$859.4 million.
Despite Yahoo’s decline, its operations are attractive to Verizon as the nation’s largest wireless carrier tries to capitalize on the growing number of people living their digital lives on smartphones.
April: Yahoo reaches a pact to add Starboard chief Jeffrey Smith and three nominees to its board. Firm reports US$99 million in quarterly loss. The most logical buyer would be Softbank, which already owns 43% of Yahoo Japan. The Internet pioneer’s services draw about one billion visitors each month. Yahoo, by then a holding company, would end up owning this asset in addition to the Alibaba stake, and would eventually need to figure out what to do with it.
Most analysts expect the deal to end the four-year reign of Yahoo’s Mayer, who flopped in her much-watched attempt to turn around the company that was once a titan valued at $130 billion.
She has been a controversial figure at the company ever since an even more controversial figure, Mayer, lured her to Yahoo in 2013 as the centerpiece of a renewed investment in premium content meant to attract advertisers and audience.
After reporting earnings last week, Mayer made what may have been her final case to investors and the public that she worked to “create a better Yahoo”.
“They are going to lose on the merits”, he said.
Yahoo Chief Executive Officer Marissa Mayer said on a conference call with investors that she planned to stay at Yahoo through the deal’s close.
To minimize its tax liabilities, Yahoo could do a “cash-rich split off” with Yahoo Japan, whereby Yahoo would swap its Yahoo Japan shares for cash and assets from Yahoo Japan, according to corporate tax law consultant Robert Willens.
While those extensions of the Couric brand bring in new revenue and allow her to experiment in new areas, they have also delivered backlash.
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AT&T and Quicken Loans founder Dan Gilbert, as well as firms Vector Capital Management and TPG, were also active in bidding for Yahoo.
