Verizon buys Yahoo’s operating business for $4.8 billion; Alibaba shares remain intact

By: | Updated: July 25, 2016 6:29 PM

Yahoo is all set to be rolled in Verizon's AOL operations. Verizon on Monday announced that it will acquire Yahoo! Inc's operating business for approximately $4.83 billion in case.

Verizon is all set to buy out Yahoo and by combining it with AOL, wishes to revive them. Here are a few things you should know about the companies. (Picture: Reuters)Verizon is all set to buy out Yahoo and by combining it with AOL, wishes to revive them. Here are a few things you should know about the companies. (Picture: Reuters)

Yahoo is all set to be rolled in Verizon’s AOL operations. Verizon on Monday announced that it will acquire Yahoo! Inc’s operating business for approximately $4.83 billion in case. The amount is subject to customary closing adjustments. According to Verizon, the transaction will create a new rival in mobile media technology. The addition of Yahoo to Verizon and AOL will create one of the largest portfolios of owned and partnered global brands with extensive distribution capabilities, said a Verizon press release. Combined, AOL and Yahoo will now have more than 25 brands.

“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,” Yahoo Chief Executive Marissa Mayer said in a statement on Monday. Verizon prevailed over rival bidders for Yahoo, including AT&T Inc ; a group led by Quicken Loans founder Dan Gilbert and backed by billionaire Warren Buffett; private equity firm TPG Capital LP; and a consortium of buyout firms Vector Capital and Sycamore Partners.

Verizon currently earns profit from its data plans that connect devices to the internet; with AOL and Yahoo’s services, it is now looking to control more of the advertising on phones, rather than surrendering its control to the popular platforms such as Google and Facebook.  If Verizon fully owned Yahoo right now, it would generate about $3.6 billion in US ad revenue this year to eclipse Microsoft for third place in the market, based on eMarketer’s estimates.

Yahoo will be integrated with AOL under Marni Walden, EVP and President of the Product Innovation and New Businesses organization at Verizon. The transaction doesn’t include Yahoo’s cash, its shares in Alibaba Group Holdings, shares in Yahoo Japan, Yahoo’s convertible notes, certain minority investments, and Yahoo’s non-core patents (called the Excalibur portfolio).

Under pressure from activist investor Starboard Value LP, Yahoo launched the auction of its core business in February 2016. In premarket trading, shares of Verizon were up slightly at $56.30, while shares of Yahoo were down 1.5 percent at $38.80.

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