Considering Yahoo’s market cap at the close of trading Monday, after Verizon VZ, -0.41% said it would pay $4.8 billion for the core business, was more than $36 billion, Wall Street appears to value these assets at more than $30 billion.
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Yahoo will be combined with AOL, another faded Internet star that Verizon bought a year ago.
It would also mark the end of Yahoo as an operating company, leaving it only as the owner of a 35.5 percent stake in Yahoo Japan, as well as its 15 percent interest in Chinese e-commerce company Alibaba Group Holding Ltd.
Yahoo was never really able to adapt its technology and culture for a post-2000 internet that was focused on social media and mobile devices, and so it steadily fell behind rivals such as Google and Facebook.
The deal is likely to end the four-year reign of Yahoo CEO Marissa Mayer, a former Google executive who flopped in her attempts to turn around the Sunnyvale, California, company. “Yahoo is a company that changed the world and will continue to do so”, she said during a Monday conference call with analysts. “I’m planning to stay… I love Yahoo, and I want to see it into its next chapter”. She invested heavily in improving Yahoo’s mobile products, expanding its audience through the acquisition of Tumblr and doubling down on premium media content. She brought in TV journalist Katie Couric as Yahoo’s “global anchor”.
Plus, Mayer is in line to pocket $54.9 million if she leaves upon the change in control.
Monday’s sale of Yahoo Inc.’s core assets to Verizon Wireless caps off a contentious and highly scrutinized fight over how to drive value at the technology giant, which has continued to fall behind its competitors.
Mayer arrived in 2012 from Google seeking to revitalize Yahoo, which at its peak had a market value of over $100 billion.
In June, Barclays said Verizon could save up to US$500 million a year in costs by buying Yahoo’s Internet business, as it would no longer have to shell out for traffic and other expenses.
“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.
Yahoo has hired a succession of CEOs to engineer a comeback, but finally gave up after the high hopes that accompanied Mayer’s hiring fizzled out. If she received that payout, her total compensation from Yahoo for her service so far would be about $218 million, according to the compensation research firm Equilar.
Yahoo executives said the remaining company is structured to “indefinitely” hold its Yahoo Japan and Alibaba stakes.
The takeover will double the size of Verizon’s digital advertising, placing it as a distant third behind Google and Facebook in the US$187 billion market.
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The deal is subject to customary closing conditions, approval by Yahoo’s shareholders, and regulatory approvals, and is expected to close in the first quarter next year.
