Verizon Has Officially Buy Yahoo
Verizon has agreed to pay $4.83 billion for Yahoo (YAHOO, Tech30), the companies said before markets opened Monday.
The sale completes Yahoo's evolution from influential search pioneer and web portal juggernaut to, in the end, a once-dominant brand that lost its way.
Parties as diverse as Warren Buffett and The Daily Mail were interested in buying Yahoo. But after a sale process that dragged on for months, Verizon (VZ, Tech30), long viewed as the front runner, is walking away with Yahoo's more than one billion monthly active users.
Current Yahoo shareholders will keep the company's lucrative investments in Chinese e-commerce giant Alibaba and Yahoo Japan. They will be spun into a separate, yet-to-be-named, publicly traded company. The deal also excludes some patents and Yahoo's cash.
The Verizon deal must be approved by regulators and is expected to be finalized in the first quarter of 2017.
The sale puts an end to Yahoo's 21-year history as an independent company. Yahoo will now be integrated with Verizon-owned AOL under Marni Walden, an executive vice president at the telecom company.
It also ends a turnaround effort by Marissa Mayer, who joined Yahoo four years ago and promised to revitalize the company. Verizon and Yahoo have not commented on who will lead the deal is complete.
It's unclear what Mayer will do after the deal closes. A spokesman for Yahoo said it's "too early to say" whether she will stay on as CEO, accept a new role at Verizon, or step aside. Meanwhile, Mayer says she will stay on to see Yahoo through its transition.
"For me personally, I'm planning to stay," Mayer wrote Monday in a memo to employees posted on Tumblr. It's important to me into its next chapter."
AOL CEO Tim Armstrong told CNN's Poppy Harlow that he and Mayer are focusing first on getting "the strategy right, and then the structure and the roles right."
"I've known Marissa for almost 20 years," Armstrong said. "The press has tried to make it a little more of drama camp, but we come from similar backgrounds."
On a conference call with analysts after the announcement, Mayer repeated that line before adding, "A lot of the integration discussions are still ahead of us."
Mayer also tried to frame the deal in a positive light on the call. She touted Verizon's potential to "accelerate our revenue stream in digital advertising" and repeatedly said she was "excited" for the future.
"The single biggest thing this whole deal is about is scale," Armstrong told Harlow. "We will essentially end up being one of the largest portfolios of consumer brands in the world for digital."
Mayer, like Armstrong, previously worked at Google (GOOG) before taking over the top spot at Yahoo in 2012. She invested heavily in improving its mobile products, expanding its audience through the acquisition of Tumblr and doubling down on premium media content. She brought in TV journalist Katie Couric as Yahoo's "global anchor."
But Mayer struggled to slow overall ad sales decline.
After reporting earnings last week, Mayer made what may have been her final case to investors and the public that she worked to "create a better company.
But the sale price suggests that In 2008, for example, Microsoft (MSFT, Tech30) was willing to pay more than $45 billion for Yahoo, an offer that was rebuffed by co founder Jerry Yang.
Yahoo was synonymous with the Internet itself in the late '90s. But for Verizon, the deal is about more than just nostalgia. The telecom company has invested in digital content and advertising in recent years, buying AOL and the Huffington Post.
Investors were less than thrilled. Shares of Yahoo were down nearly 4% Monday afternoon.
Yahoo-Verizon $4.83 Billion Deal Explained In Five Points
Verizon - America's biggest mobile operator - on Monday announced a $4.83 billion cash deal to buy off the company's and its internet properties, which includes its search engine, email service and sections devoted to news, sports and finance. Verizon's second biggest AOL's buyout for $4.4 billion last year. The deal puts an end to the five-month auction that was supposed to decide the company's future.
1) Verizon has access to 150 million unique monthly AOL users, will gain an additional 200 million unique visitors that come to Yahoo's sites every month. The buyout will help Verizon emerge as a formidable rival to Google and Facebook, who dominated the US digital-ad market with a 55 per cent share last year. The Yahoo brand will be transferred to Verizon as part of the deal, which is expected to close in early 2017.
2) Why Yahoo put its internet business on the block? it's revenue peaked in 2008, after which the company failed to keep up with Google and Facebook in the battle for online advertisers despite running some of the world's most-read websites. The failure of the company's management to turnaround the internet business led activist investors to push for an outright sale of the company. Meanwhile, misplaced bets, such as the decision to buy social-blogging service Tumblr for $1.1 billion in 2013, also weighed on the company. Yahoo had to write down its investment in Tumblr as its value plunged by almost two-thirds over the last three years.
3) founded in 1994 by Jerry Yang and David Filo, was a pioneer of online search and was valued at $125 billion at its 2000 peak. Yahoo's email service continues to be the second most-popular in the US behind Google's Gmail. But despite an early start, Yahoo failed to create a niche in either the media industry or the technology world, unlike internet search leader Google or social networking giant Facebook. Many analysts have blamed Yahoo for missing a string of opportunities that could have transformed the company. Yahoo had the opportunity to buy Google for $5 billion in 2002. Then there was a failed bid to buy Facebook for $1 billion in 2006. Yahoo later lost YouTube and Skype to rivals. In 2008, Yahoo's board rejected a $45 billion takeover bid from Microsoft.
4) What happens to Yahoo's shareholders? Though Yahoo's core business floundered, its bets on other ventures, such as Chinese e-commerce company Alibaba, paid rich dividends. Yahoo has a 15 per cent stake in Alibaba and over one-third stake in Yahoo Japan, which are together valued at about $40 billion. Yahoo also has $7.7 billion in cash, in addition to the $4.8 billion it will receive at the close of the Verizon deal, which it plans to return to shareholders.
5) What's in store for celebrated CEO Marissa Mayer? 41-year-old Ms Mayer, a star Google executive hired in 2012, plans to stay at the company through the deal's close. Ms Mayer, who was the highest paid female CEO in the US in 2015, laid off 15 per cent of workforce and closed unprofitable services in the last few years, but her efforts to turn around the company ended in a failure. Analysts however say that Yahoo's problems didn't start with Ms Mayer. She would walk away with an approximately $55 million severance package if Yahoo's sale to Verizon ousts her from her job.