Buy to boost its AOL internet business Verizon to acquire Yahoo for $4.8 bn

Verizon Communications said on Monday it would buy Yahoo’s core internet properties for $4.83 billion (around ₹32,361 crore) in cash to expand its digital advertising and media business, in a deal that ends a lengthy sale process for the fading Web pioneer.

The purchase of Yahoo’s operations will boost Verizon’s AOL internet business, which it bought last year for $4.4 billion, and give it access to Yahoo’s ad technology tools, BrightRoll and Flurry, and assets such as search, mail and messenger. The deal, expected to close in early 2017, marks the end of Yahoo as an operating company, leaving it with a 15% stake in Chinese e-tailer Alibaba and a 35.5% in Yahoo Japan. The sale also does not include Yahoo’s cash and non-core patents, which it is trying to sell separately.

Yahoo employs 9,400 people worldwide. India-specific figures are not available, but since the company does not have a significant presence in the country, the deal is unlikely to have an impact on its operations here.

“The sale of our operating business, which separates our Asian asset equity stakes, is an important step in our plan to unlock shareholder value for Yahoo,” CEO Marissa Mayer said in a statement on Monday.

Yahoo currently has $7.7 billion in cash, in addition to the $4.8 billion it will receive at the close of the deal, which it plans to return to shareholders.

The company will be integrated with AOL under Marni Walden, head of product innovation and new business at Verizon. “Yahoo gives us scale,” Walden said. “The company’s audience will go from the millions to the billions.”

Mayer said on a conference call with investors that she planned to stay at Yahoo through the deal’s close, but Walden told CNBC the new leadership team has yet to be determined.

A high-profile Google executive, Mayer was brought in as Yahoo’s CEO in 2012 to architect a turnaround that has largely failed to materialise. If she is terminated, she will get a severance package of $57 million.

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.

Under pressure from activist investor Starboard Value LP, Yahoo launched an auction of its core business in February after shelving plans to spin off its stake in Alibaba.

“It’s a decade of mismanagement that has finally ended for Yahoo,” said Roger Entner, analyst at Recon Analytics.