At long last, Yahoo finds a willing buyer
Yahoo has finally found a willing buyer. This deal follows months of uncertainty and layoffs Yahoo has faced after seeing a net revenue decline of 15 percent for the fourth quarter of 2015. Meanwhile, Yahoo announced this past February that it would lay off 15 percent of its entire workforce – about 1,600 jobs – and shut down five of its offices: in Buenos Aires, Dubai, Madrid, Mexico City and Milan, according to Variety.
In addition to these cost-cutting measures, CEO Marissa Mayer said that it would be exploring strategic alternatives, which included a potential a merger deal. Mayer faced significant odds through sale as well, as one of the company's investor groups, Starboard Value, called for her resignation throughout the process, according to CNET. Now, Verizon Communications has agreed to acquire Yahoo's core assets in a deal valued at approximately $4.83 billion in cash.
Terms of the deal
While Verizon will be purchasing Yahoo's content, search, advertising and mobile activities, it will not acquire the company's 34 percent stakes in Yahoo Japan or 15 percent of Alibaba, according to TechCrunch. Yahoo's $1 billion patent portfolio isn't outlined in the terms of the deal either. This deal comes a little over a year after Verizon purchased AOL, a leader in digital content and online advertising, in May 2015 for $4.4 billion. Yahoo will integrate with AOL under the terms of the deal.
"Just over a year ago we acquired AOL to enhance our strategy of providing a cross-screen connection for consumers, creators and advertisers." Lowell McAdam, Verizon chairman and CEO, explained. "The acquisition of Yahoo will put Verizon in a highly competitive position as a top global mobile media company, and help accelerate our revenue stream in digital advertising."
What this deal means for Verizon
Verizon reported that Yahoo reaches an international audience of over 1 billion monthly active users, with around 600 million monthly active mobile users. When integrated with AOL's own extensive audience and portfolio, Verizon will own one of the largest digital content global brands. Bloomberg reported that this deal will double the size of Verizon's digital advertising operations and allow it to effectively compete with Google and Facebook.
"The deal speaks to a clear strategy shift at Verizon," Craig Moffett, an analyst with MoffettNathanson, told Bloomberg. "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."
The deal must still face regulatory and shareholder approvals, but is projected to close by the end of Q1 of 2017 after meeting customary closing conditions. During this time, Yahoo will operate independently before integrating under Marni Walden, the EVP and president of Product Innovation and New Businesses organization at Verizon.