After a process lasting months with multiple rounds of bidding, Verizon Communications, Inc. has been named the successful bidder in Yahoo, Inc.’s auction process and has entered into a definitive agreement to acquire the company.
Under the terms of the deal, Verizon will acquire Yahoo’s operating business, that is the entire company excluding their shareholding in Alibaba Group Holding Ltd., the company’s stake in Yahoo Japan, Yahoo’s cash at hand, convertible notes and certain minority investments for $4.83 billion in cash.
The remaining assets will be spun off into a new business, but the details as to whether they will be kept together or split up are not clear at this stage.
Verizon was long favored as the best match for Yahoo given its ownership of the AOL network, and unsurprisingly the acquisition announcement notes that Yahoo’s properties will be integrated into AOL, creating a broad-based business unit which together makes it one of the largest portfolios of owned and partnered global brands online; AOL operates its core AOL branded properties along with the former Weblogs, Inc. business that includes sites such as Engadget, the tech blog TechCrunch, and The Huffington Post.
“Just over a year ago we acquired AOL to enhance our strategy of providing a cross-screen connection for consumers, creators and advertisers,” Verizon Chairman and Chief Executive Officer Lowell McAdam said in a statement. “The acquisition of Yahoo will put Verizon in a highly competitive position as a top global mobile media company, and help accelerate our revenue stream in digital advertising.”
In a separate post on social justice warrior blogging site Tumblr, the proven worst acquisition made under her tenure, soon to be outgoing Chief Executive Officer Marissa Mayer spun the acquisition as yielding “a great outcome for the company” that presents “exciting opportunities to accelerate Yahoo’s transformation.”
It should be remembered that Mayer had her own plan to reform Yahoo which dismally failed along the way; this is not to besmirch Mayer as a person (she is without question highly intelligent and a decent human being), rather it seems nothing short of a miracle could have turned Yahoo around, and that’s the massive challenge facing Verizon going forward.
“Yahoo is a company that has changed the world, and will continue to do so through this combination with Verizon and AOL,” Mayer wrote. “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. This transaction also sets up a great opportunity for Yahoo to build further distribution and accelerate our work in mobile, video, native advertising and social.”
Yahoo will be integrated with AOL under Marni Walden, Executive Vice President and President of the Product Innovation and New Businesses organization at Verizon; Tim Armstrong as head of AOL will naturally head the combined business unit.
The deal is subject to customary closing conditions, approval by Yahoo’s shareholders (which won’t be a problem), and regulatory approvals, and is expected to close in the first quarter of 2017.