Ya­hoo seals $4.8 bil­lion deal to sell core as­sets to tele­com gi­ant Ver­i­zon

The Myanmar Times - - Business -

YA­HOO sealed a deal on July 25 to sell its core busi­ness to tele­com gi­ant Ver­i­zon for US$4.8 bil­lion, end­ing a two-decade run as an in­de­pen­dent com­pany for the in­ter­net pi­o­neer.

The agree­ment an­nounced by the two com­pa­nies af­ter months of ne­go­ti­a­tions comes fol­low­ing a years-long de­cline for the iconic firm that in­tro­duced many peo­ple around the world to the in­ter­net.

Ver­i­zon chief ex­ec­u­tive Low­ell McA­dam said Ya­hoo would be in­te­grated into its re­cently ac­quired AOL unit to cre­ate “a top global mo­bile me­dia com­pany, and help ac­cel­er­ate our rev­enue stream in dig­i­tal ad­ver­tis­ing”.

The ac­qui­si­tion, ex­pected to close in early 2017, pend­ing share­holder and reg­u­la­tory ap­proval, will ex­clude Ya­hoo’s cash, cer­tain patent hold­ings, and its big share in China’s Alibaba Group and stake in Ya­hoo Ja­pan.

The deal will, how­ever, turn over the pop­u­lar Ya­hoo News, Mail and other on­line ser­vices used by more than 1 bil­lion peo­ple world­wide.

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

She told a con­fer­ence call that Ver­i­zon “of­fers sig­nif­i­cant strate­gic align­ments in Ya­hoo’s fo­cus on in­form­ing, con­nect­ing and en­ter­tain­ing our users”.

She added that the agree­ment is “an ex­cep­tional out­come for Ya­hoo share­hold­ers” and that Ver­i­zon was cho­sen be­cause it “be­lieved in our vi­sion the most”.

With the sale of its core busi­ness, Ya­hoo will be left as a sep­a­rate in­vest­ment com­pany and change its name af­ter the trans­ac­tion.

Ya­hoo shares fell 2.7 per­cent af­ter the long-ex­pected deal was an­nounced. Ver­i­zon lost 0.4pc.

The deal comes with Ya­hoo, a one­time leader in the on­line space, cop­ing with years of de­cline and strug­gling to keep up with ri­vals like Google and Face­book.

Ya­hoo will op­er­ate in­de­pen­dently un­til the ac­qui­si­tion and then fall un­der the aegis of the AOL unit chief, Tim Arm­strong, a former Google col­league of Ms Mayer.

Ms Mayer’s fu­ture role with Ya­hoo was un­clear.

In an email to em­ploy­ees, she said, “I’m plan­ning to stay ... It’s im­por­tant to me to see Ya­hoo into its next chap­ter”.

But it was not clear if she would re­main af­ter the tran­si­tion.

Ac­cord­ing to doc­u­ments filed with reg­u­la­tors this year, Ms Mayer would get a sev­er­ance pack­age of $55 mil­lion if re­moved within a year of a change of con­trol.

Ms Mayer ar­rived in 2012 from Google seek­ing to re­vi­talise Ya­hoo, which at its peak had a mar­ket value of over $100 bil­lion.

The com­pany was founded in 1994 by two Stan­ford Univer­sity stu­dents, Jerry Yang and David Filo, as “Jerry and David’s Guide to the World Wide Web”.

It went pub­lic in 1996 in one of the most hotly an­tic­i­pated stock of­fer­ings of the time – surg­ing 270 per­cent in the first day of trad­ing.

Ya­hoo re­mains a ma­jor force on­line, but has lagged its ri­vals in its abil­ity to “mon­e­tise” its au­di­ence through ad­ver­tis­ing that is linked to cus­tomers’ brows­ing and other on­line ac­tiv­i­ties.

Re­search firm eMar­keter es­ti­mated that Ya­hoo’s share of the dig­i­tal ad­ver­tis­ing mar­ket would fall this year to around 1.5pc, with Google get­ting some 30pc and Face­book 12pc.

Sev­eral other bid­ders had been in talks, ac­cord­ing to re­ports, in­clud­ing Quicken Loans founder Dan Gil­bert, who was be­ing backed by bil­lion­aire War­ren Buf­fett.

But Ver­i­zon ap­peared to be the lead­ing can­di­date be­cause of its abil­ity to in­te­grate AOL’s ad­ver­tis­ing tech­nol­ogy into Ya­hoo ser­vices.

Ya­hoo had a $37 bil­lion mar­ket value at the end of trade on July 22, but its Alibaba and Ya­hoo Ja­pan hold­ings are es­ti­mated to be worth $40 bil­lion or more. –

Photo: AFP

The Ver­i­zon head­quar­ters build­ing in New York City.

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