Verizon to buy Yahoo!'s core business for $4.8 bn

The board of the Silicon Valley-based Yahoo! has agreed to sell it score internet operations and land holdings to Verizon Communications for $4.8 billion. After the sale, Yahoo! shareholders will be left with $41 billion in investments in the Chinese e-commerce company Ali ba ba, as well as Yahoo! Japan and a small portfolio of patents.

Verizon Communications said on Monday it would buy Yahoo!’s core internet properties for $4.83 billion in cash to expand its digital advertising and media business, ending a protracted sale process for the fading Web pioneer.

The purchase will boost Verizon’s AOL internet business, which it bought last year for $4.4 billion, as it gains access to Yahoo!’s ad technology tools, BrightRoll and Flurry, and search, email and messenger assets.

Verizon, the No. 1 US wireless operator, has in recent years looked to mobile video and advertising for new sources of revenue in an oversaturated wireless market. It has also scaled back on its Fios TV and internet service.

Verizon could combine data from AOL and Yahoo! users in addition to its more than 100 million wireless customers to help advertisers target users based on online behaviour and preferences.

“Yahoo! gives us scale that is what is most critical here, Marni Walden, who is head of product innovation and new business at Verizon told CNBC, adding that the company’s audience will go from the millions to the billions. “We want to compete and that is the place we need to be.”Yahoo! Chief Executive Officer Marissa Mayer said on a conference call with investors that she planned to stay at Yahoo! through the deal’s close. Walden, who will head the combined company, told CNBC the new leadership team has yet to be determined.

“It’s a decade of mismanagement that has finally ended for Yahoo!,” said Recon Analytics analyst Roger Entner. “It’s the continuation of an extension of Verizon’s strategy toward becoming a wireless internet player and a move away from (telecom) regulation for Verizon into an unregulated growth industry.”

Shares of Verizon dipped 0.4 per cent to $55.88, Yahoo fell 2.6 per cent to $38.37.