Ver­i­zon could cut price, exit Ya­hoo deal

The Denver Post - - BUSINESS - By Scott Moritz and Brian Wom­ack

Ver­i­zon Com­mu­ni­ca­tions Inc. is ex­plor­ing a price cut or pos­si­ble exit from its $4.83 bil­lion pend­ing ac­qui­si­tion of Ya­hoo Inc., af­ter the com­pany re­ported a sec­ond ma­jor e-mail hack af­fect­ing as many as 1 bil­lion users, ac­cord­ing to a per­son fa­mil­iar with the mat­ter.

While a Ver­i­zon group led by AOL chief ex­ec­u­tive of­fi­cer Tim Arm­strong is still fo­cused on in­te­gra­tion plan­ning to get Ya­hoo up and run­ning, another team, walled off from the rest, is re­view­ing the breach dis­clo­sures and the com­pany’s op­tions, said the per­son, who asked not to be iden­ti­fied dis­cussing pri­vate in­for­ma­tion.

A le­gal team led by Ver­i­zon gen­eral coun­sel Craig Sil­li­man is as­sess­ing the dam­age from the breaches and is work­ing to­ward ei­ther killing the deal or rene­go­ti­at­ing the Ya­hoo pur­chase at a lower price, the per­son said. One of the ma­jor ob­jec­tives for Ver­i­zon is ne­go­ti­at­ing a sep­a­ra­tion from any fu­ture le­gal fall­out from the breaches. Ver­i­zon is seek­ing to have Ya­hoo as­sume any last­ing re­spon­si­bil­ity for the hack dam­age, the per­son said.

Ya­hoo shares fell as much as 6.5 per­cent to $38.25, the big­gest in­tra­day de­cline since Fe­bru­ary. Ver­i­zon rose less than 1 per­cent to $52.07.

User data from more than 1 bil­lion ac­counts was stolen in Au­gust 2013, ac­cord­ing to a Ya­hoo state­ment Wed­nes­day, the sec­ond ma­jor breach the com­pany has dis­closed in the past three months. Given the sever­ity of the hack, which in­cluded more than 150,000 U.S. gov­ern­ment em­ploy­ees, Ver­i­zon is un­der pres­sure to re­assess the value of the deal and ap­pease share­hold­ers who may see Ya­hoo as dam­aged goods.

Ver­i­zon has said that the deal, which is ex­pected to close in the first quar­ter of 2017, still makes sense strate­gi­cally. The com­pany is hop­ing to ex­pand be­yond its wire­less phone ser­vice by build­ing a mo­bile me­dia and ad­ver­tis­ing busi­ness and wants to work the bil­lion or more Ya­hoo users into the fold.

The new hacks could weaken Ya­hoo’s rep­u­ta­tion with users who have been us­ing its ser­vices for years.

Hours af­ter the disclosure, a Ya­hoo user filed a class-ac­tion law­suit against the Sun­ny­vale, Calif.-based com­pany.

“Ya­hoo failed, and con­tin­ues to fail, to pro­vide ad­e­quate pro­tec­tion of its users’ per­sonal and con­fi­den­tial in­for­ma­tion,” New York con­sumer Amy Vail said in the law­suit. “Ya­hoo users’ per­sonal and pri­vate in­for­ma­tion has been re­peat­edly com­pro­mised and re­mains vul­ner­a­ble.”

Suzanne Phil­ion, Ya­hoo spokes­woman, didn’t re­spond to e-mail and phone mes­sages seek­ing a re­sponse to the suit.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.