Hacking breaches lower sale price of Yahoo by $350M

SAN FRANCISCO — Yahoo is taking a $350 million hit on its previously announced $4.8 billion sale to Verizon in a concession for security lapses that exposed personal information stored in more than 1 billion Yahoo user accounts.

The revised agreement, announced Tuesday, eases investor worries that Verizon Communications Inc. would demand a discount of at least $1 billion or cancel the deal entirely.

The hacking bombshells, disclosed after the two companies agreed on a sale, represent the two biggest security breaches in internet history.

The breaches raised concerns that people might decrease their use of Yahoo email and other digital services that Verizon is buying.

Yahoo has maintained that its users have remained loyal, despite any mistrust that might have been caused by its lax security and the lengthy delay in discovering and disclosing the hacks. The separate attacks occurred in 2013 and 2014; Yahoo disclosed them this past September and December.

The lower price, now pegged at $4.48 billion, will cost Yahoo shareholders roughly 37 cents per share. But they may also be responsible for substantial legal costs.

After the Verizon deal closes, any future bills stemming from the hack will be shouldered by Altaba Inc. — a company that will become the caretaker of Yahoo’s remains, which will include about $7 billion in cash and lucrative stakes in Chinese e-commerce giant Alibaba Group and Yahoo Japan.

Altaba will be responsible for all costs stemming from shareholder lawsuits and a Securities and Exchange Commission probe into how Yahoo handled the disclosure of the massive hacks. Verizon and Altaba will split costs from all other hack-related lawsuits and government investigations.

This agreement “provides protections for both sides” and should help the deal close by the end of June, Marni Walden, Verizon’s head of product innovation and new businesses, said in a statement. Yahoo shareholders have to approve it.

Avoiding an even larger reduction in the deal value represents a small victory for Yahoo CEO Marissa Mayer, who had already been under fire on Wall Street for her inability to turn around the company and then for the humiliating security lapses that came under her watch.