Verizon Communications is expected to announce a deal Monday morning to acquire Yahoo Inc. for $4.8 billion, adding it to its AOL internet business.
Ryan Knutson and Deepa Seetharaman of The Wall Street Journal have the news:
The price tag, which includes Yahoo’s core internet business and some real estate, is a remarkable fall for the Silicon Valley web pioneer that once had a market capitalization of more than $125 billion at the height of the dot-com boom.
For New York-based Verizon, the deal simply adds another piece to the digital media and advertising business it is trying to build.
The deal is expected to be announced early Monday. The price was earlier reported by Bloomberg News.
Verizon plans to keep the Yahoo brand, according to a person familiar with its plans.
When the bidding began in April, Verizon was the immediate front-runner with a market capitalization of roughly $228 billion and a plan for how to plug Yahoo into its upstart digital media business, which includes AOL properties it acquired last year for $4.4 billion.
Verizon’s competition came primarily from private-equity firms such as Bain Capital, Vista Equity Partners, TPG and Advent International Inc., as well as a group led by Quicken Loans founder Dan Gilbert. AT&T Inc. joined the bidding process later, but it wasn’t seen as a serious contender, people familiar with the matter said.
Verizon in June submitted a bid of $3 billion, but that didn’t include Yahoo’s real estate and came before last week’s final round of bidding.
Alex Sherman and Matthew Townsend of Bloomberg News note that Yahoo will be left with an investment in Alibaba and Yahoo Japan:
he deal comes about two years after Starboard began campaigning for changes at Yahoo. In September 2014, it pushed Mayer, who was a little over two years into leading a turnaround, to merge with AOL Inc. She didn’t oblige. In February, facing continued pressure, the company said it was considering a sale.
In some ways, a takeover of Yahoo by Verizon would finally give Starboard what it wanted because the telecom giant acquired AOL last year. Back then, Starboard saw combining the two flailing Web portals as a way to cut $1 billion in costs. AOL’s advertising technology, which has improved under CEO Tim Armstrong, can now better leverage Yahoo’s “reasonably strong” content for mobile devices, Moffett said.
“Verizon is hoping that combining Yahoo’s content with AOL’s ad technology platform and Verizon’s own insights into user data can make the advertising inventory much more valuable,” he said.
The activist crusade may also cost Mayer her job. Her arrival was met with great fanfare when she was lured away from Google in 2012. While she made progress on some products such as Yahoo’s e-mail and media, overall sales growth remained sluggish.
Todd Frankel, Brian Fung and Hayley Tsukayama of The Washington Post explore why Verizon wants Yahoo:
Landing Yahoo, too, would provide Verizon with a sizable cut of the U.S. online market. Yahoo and AOL might not be trendy names, but they ranked No. 3 and No. 6, respectively, in ComScore’s list of the top digital media properties in the United States in February.
Add AOL and Yahoo together, and their unique visitors were 50 percent greater than No. 1 Google.
Verizon’s desire for Yahoo spotlights the grand scale of its ambitions: Not happy with just providing access to content, it wants to own a fat chunk of the online-content industry.
Consumers are migrating from simple email and Web browsing on their smartphones to rich mobile video and online games. And these data-hog services represent a lucrative opportunity to sell ads and, in some cases, a source of subscription revenue.
Analysts say the sprawling nature of Yahoo’s properties led its leadership astray.
