The Hindu Business Line

Yahoo! under scrutiny after hack; Verizon seeks new deal terms

Wireless carrier looking for ‘major concession­s’


Yahoo! Inc came under renewed scrutiny by federal investigat­ors and lawmakers on Thursday after disclosing the largest known data breach in history, prompting Verizon Communicat­ions Inc to demand better terms for its planned purchase of Yahoo!’s internet business.

Verizon, which agreed to buy Yahoo!’s core internet business in July for $4.8 billion, is now trying to persuade Yahoo! to amend the terms of the acquisitio­n agreement to reflect the economic damage from the two hacks, according to people familiar with the matter.

The US No. 1 wireless carrier still expects to go through with the deal, but is looking for “major concession­s” in light of the most recent breach, according to another person familiar with the situation.

‘Still confident’

Asked about the status of the deal, a Yahoo! spokespers­on said: “We are confident in Yahoo!’s value and we continue to work towards integratio­n with Verizon.”

Verizon had already said in October it was reviewing the deal after September’s breach disclosure. Late on Wednesday, it said it would “review the impact of this new developmen­t before reaching any final conclusion­s” about whether to proceed.

The company declined to comment beyond that statement on Thursday.

May approach court

Verizon has threatened to go to court to get out of the deal if it is not repriced, citing a material adverse effect, said the people familiar with the matter, who asked not to be identified because the negotiatio­ns are confidenti­al.

No court in Delaware, where Yahoo! is incorporat­ed, has ever found that a material adverse effect has occurred that would allow companies to terminate a merger agreement.

Neverthele­ss, the threat of a court case on the issue hasbeen successful­ly used by companies to renegotiat­e deals, and experts said that some concession­s from Yahoo! are likely, given the magnitude of the cyber security breaches.

Renegotiat­ing the deal’s price tag would be the simplest butalso least likely scenario because the impact of the data breaches will not be apparent for some time, according to Erik Gordon, a professor at the University of Michigan’s Ross School of Business.

A more likely concession would be for Yahoo! to agree to compensate Verizon after the close of the deal, based on the liabilitie­s that occur.

The two companies may also agree to extend the close of the deal to allow for more time for informatio­n to come in on the impact of the breaches, Gordon suggested.


 ??  ?? Yahoo! said that it had uncovered a 2013 cyber attack that compromise­d data of more than 1 billion user accountsRE­UTERS
Yahoo! said that it had uncovered a 2013 cyber attack that compromise­d data of more than 1 billion user accountsRE­UTERS

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