Verizon is reportedly seeking a RM1.1 bln price cut on Yahoo
VERIZON is close to a new deal with Yahoo in which the telecom giant would purchase the beleaguered Internet company for a slight discount of US$ 250 million ( RM1.1 billion), according to Bloomberg News.
If true, that amounts to a price cut of about five per cent. Analysts have predicted for months that Verizon could seek to renegotiate for a lower price - or walk away from Yahoo altogether - amid revelations of extensive security breaches at Yahoo last year.
“This is the kind of move I expected from Verizon,” said Jeff Kagan, an independent telecom and Internet industry analyst. But, he added, “I am surprised the deal was only cut by US$ 250 million. I expected more.”
Proposed last year, the original acquisition had Verizon buying Yahoo for US$ 4.8 billion in an effort to diversify Verizon’s business. The wireless and broadband service provider hopes to sell advertising against Yahoo’s numerous websites, as well as to gather up the behavioural data generated by users of the company’s services. With fantasy sports leagues, Tumblr and a major news portal, Yahoo still ranks among the most-visited destinations on the Web after Google and Facebook.
But Verizon’s plans for Yahoo ran aground after Yahoo disclosed a string of data breaches that analysts say are among history’s largest. Amid multiple warning flags raised by Verizon and a probe by federal regulators over whether Yahoo adequately informed shareholders of the risk, Yahoo’s future seemed uncertain in recent weeks.
Under the terms of the tie-up, a finding by Verizon that the breaches have had a “material” effect on Yahoo’s core business would give Verizon an opportunity to renegotiate or abandon the deal. In October, Verizon executives said they were leaning toward just such a conclusion, but needed more information from Yahoo. In recent weeks, the company said it was still no closer to a decision, although Wednesday’s reports suggest Verizon is still angling for a deal.
Some analysts warned that if Verizon moved forward with the transaction, it would face the possibility of discovering still further lapses in Yahoo’s security for years to come.
Last Wednesday, Yahoo informed some users they may have been compromised as a result of hacker activity between 2015 and 2016. The malicious activity had been disclosed previously by Yahoo and is linked to the same actors who may have been behind the breach at Yahoo that was announced in September, according to the company. Nevertheless, Yahoo recently said it expected the deal with Verizon to close in the second quarter. The company’s stock closed up 1.4 per cent last Wednesday. Verizon’s stock closed down 0.37 per cent.
Both companies declined to comment on the deal.