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Tuesday, July 26, 2016, 09:21

Verizon to buy Yahoo operating business for US$4.8b

By Agencies
Verizon to buy Yahoo operating business for US$4.8b
Logos are seen on a laptop, Monday, July 25, 2016, in North Andover, Mass. Verizon is buying Yahoo for US$4.83 billion, marking the end of an era for a company that once defined the internet. It is the second time in as many years that Verizon has snapped up the remnants of a fallen internet star as it broadens its digital reach. (AP Photo / Elise Amendola)

SAN FRANCISCO - Seeking a wider digital audience, Verizon is buying Yahoo for US$4.83 billion in a deal that marks the end of an era for a company that defined much of the early internet but struggled to stay relevant in an online world dominated by Google and Facebook.

It's the second time in as many years that Verizon has snapped up the remnants of a fallen internet star. The nation's largest wireless carrier paid US$4.4 billion for AOL last year.

Verizon's acquisition of Yahoo's operating business, which follows its purchase of US mass media corporation AOL in May 2015, shows the company sees online content and advertising as primary drivers of growth in the future.

Yahoo will be integrated with AOL under the Product Innovation and New Businesses organization at Verizon, according to a statement by Verizon on Monday.

"We have enormous respect for what Yahoo has accomplished: This transaction is about unleashing Yahoo's full potential," AOL CEO Tim Armstrong said in a statement.

Despite Yahoo's travails, its operations are a prize for Verizon, which wants to capitalize on the growing number of people living their digital lives on smartphones. The company already profits from the data plans that connect more than 100 million people and their devices to the internet. Now it's making plans to control more of the advertising on those devices.

Most analysts expect the deal to end the four-year reign of Yahoo's Mayer, who flopped in her much-watched attempt to turn around the company that was once a titan valued at US$130 billion.

Verizon to buy Yahoo operating business for US$4.8b
Chart showing Yahoo's quarterly revenues. (Graphic / AFP)

However, Mayer told employees Monday in an email that she intends to stay "to see Yahoo into its next chapter" without specifying for how long. In a later interview with The Associated Press, she said it's too early to know whether there will still be a desirable role for her after Yahoo and AOL are combined.

"It would be premature and presumptive of me to discuss what Verizon may or may not want to do. I will be open-minded," said Mayer, who could receive a severance package valued at US$55 million If she leaves following the sale.

In its announcement, Verizon did not discuss Mayer's future or its long-term plans for Yahoo.

"Just over a year ago we acquired AOL to enhance our strategy of providing a cross-screen connection for consumers, creators and advertisers. 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," said Verizon Chairman and CEO Lowell McAdam on Monday.

Yahoo's key assets include content brands in major categories including finance, news and sports, as well as the email services with about 225 million monthly active users, said the statement.

The deal is subject to customary closing conditions, approval by Yahoo's shareholders, and regulatory approvals, and is expected to close in the first quarter next year.

Moreover, the sale does not include Yahoo's cash, its shares in Alibaba Group Holdings, Yahoo Japan and so on. These assets will continue to be held by Yahoo, which will change its name at closing and become a publicly traded investment company, the statement said.

Shortly after the opening bell, Verizon's shares fell 0.52 percent at 55.81 dollars, while Yahoo inched down 1.68 percent at 38.72 dollars.

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