Verizon to purchase Yahoo for $5 billion
The online portal is expected to sell off its email service, news, sports, finance sites
NEW YORK— Verizon has agreed to buy online portal Yahoo Inc. for roughly $5 billion (U.S.), according to multiple media reports, each citing a single unnamed source.
The deal is expected to be announced formally on Monday before markets open, the reports said.
Verizon had emerged in recent days as the front-runner for the beleaguered Internet company. Yahoo is expected to sell its email service and news, finance and sports websites in addition to its advertising tools under pressure from shareholders fed up with a downturn in the company’s revenue during the past eight years.
The deal is likely to end the fouryear reign of Yahoo CEO Marissa Mayer, a former Google executive who flopped in attempts to turn around the Sunnyvale, Calif., company
Yahoo has been in a long, deep slump even as advertisers have been pouring more money into what is now a $160-billion market for digital advertising, according to research firm eMarketer.
Most of that money has been flowing to Internet search leader Google and social networking giant Facebook. They are two of several companies that have eclipsed Yahoo, which slid from an online sensation once valued at $130 billion to a dysfunctional also-ran. Yahoo attempted to buy both companies in their infancy.
With its core wireless business maturing, Verizon is expected to keep Yahoo mostly intact to compete with Alphabet Inc.’s Google and Facebook Inc. in digital ads by tapping into users on sites like Yahoo Finance. The takeover will double the size of Verizon’s digital advertising, placing it as a distant third behind Google and Facebook in the $187-billion market.
“The deal speaks to a clear strategy shift at Verizon,” Craig Moffett, an analyst with MoffettNathanson, said Sunday. “They are trying to monetize wireless in an entirely new way. Instead of charging customers for traffic, they are turning to charging advertisers for eyeballs.”
Yahoo gained 1.4 per cent to close at $39.38 on Friday after Bloomberg reported it was closing in on a deal with Verizon. Shares of Verizon advanced 1.3 per cent to $56.10.
After the sale is completed, Yahoo will become a holding company for its two stakes in China’s e-commerce leader, Alibaba Group, and Yahoo Japan, which is where the majority of Yahoo’s market value comes from. With files from Bloomberg