Verizon to acquire Yahoo’s operating business for $4.83 billion: What the managements are betting on

By: | Updated: July 25, 2016 6:23 PM

In one of the major deals in the technology world, Verizon today 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 (Reuters)The amount is subject to customary closing adjustments. According to Verizon, the transaction will create a new rival in mobile media technology (Reuters)

In one of the major deals in the technology world, Verizon today 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. Yahoo will be integrated with AOL under Marni Walden, EVP and President of the Product Innovation and New Businesses organization at Verizon. 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 deal is subject to customary closing conditions, approval by Yahoo’s shareholders, and regulatory approvals, and is expected to close in the first quarter of 2017. The sale does not include Yahoo’s cash, its shares in Alibaba Group Holdings, its shares in Yahoo Japan, Yahoo’s convertible notes, certain minority investments, and Yahoo’s non-core patents (called the Excalibur portfolio). These assets will continue to be held by Yahoo, which will change its name at closing and become a registered, publicly traded investment company. We take a look at what the management had to say about the deal:

Lowell McAdam, Verizon Chairman and CEO feels that the acquisition of Yahoo will put Verizon in a “highly competitive position” as a top global mobile media company. It will also help accelerate our revenue stream in digital advertising, he said. “Just over a year ago we acquired AOL to enhance our strategy of providing a cross-screen connection for consumers, creators and advertisers,” he said.

For Marissa Mayer, CEO of Yahoo, it is a company that has changed the world, and will continue to do so through this combination with Verizon and AOL. “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,” she said.

Tim Armstrong, CEO of AOL has “enormous respect” for what Yahoo has accomplished. “tThis transaction is about unleashing Yahoo’s full potential, building upon our collective synergies, and strengthening and accelerating that growth. Combining Verizon, AOL and Yahoo will create a new powerful competitive rival in mobile media, and an open, scaled alternative offering for advertisers and publishers,” he said.

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