Verizon Communications Inc announced on Monday that it will acquire Yahoo Inc’s core internet business in a cash deal valued at $4.83 billion, in an effort to grow its digital ads and media business. Yahoo shares slipped more than 2 percent following the news.
The latest acquisition will increase Verizon’s AOL internet division after securing Yahoo’s ad technology tools, BrightRoll and Flurry, as well as its mail, search and messenger properties. Verizon’s head of product innovation and new business, Marni Walden said that the company’s user base will go to the billions from the millions following the purchase.
Yahoo’s CEO Marissa Mayer stated in a Tumblr blog post that she has decided to stay at Yahoo. However, Walden said in an interview that the company has yet to take a decision regarding the new leadership team.
An analyst at Recon Analytics, Roger Entner said it is a decade long mismanagement that has finally come to an end for Yahoo.
The agreement, expected to close early next year, marks the end of Yahoo as an operating organization, leaving the fading Web pioneer with a 15 percent interest in Alibaba Group Holding and a 35.5 percent stake in Yahoo Japan Corp.
In recent years, the leading U.S. wireless operator has looked to mobile video and advertising for generating more sources of revenue while scaling back on its internet and Fios TV services.
Verizon could merge data from Yahoo and AOL users as well as its over 100 million wireless subscriber base to create data that can help advertisers particularly target users on the basis of online behaviour and preferences.
Both companies said that Yahoo will continue to work as an independent company till the agreement receives regulatory approval and shareholder consent.
The deal doesn’t include Yahoo’s cash, its stake in Yahoo Japan and Alibaba, its convertible notes and some other minority investments.