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Verizon and Yahoo have revised terms for the telecom giant’s acquisition of the core business of the Internet company after hacks of Yahoo email accounts.
In a joint statement, they said the final price tag will be $350 million lower than the original $4.83 billion price tag, or around $4.48 billion.
“We continue to be very excited to join forces with Verizon and AOL,” Yahoo CEO Marissa Mayer said. “This transaction will accelerate Yahoo’s operating business especially on mobile, while effectively separating our Asian asset equity stakes. It is an important step to unlock shareholder value for Yahoo, and we can now move forward with confidence and certainty. We have a terrific, loyal, experienced team at Yahoo. I’m incredibly proud of our team’s strong product and financial execution in 2016, setting the stage for a successful integration.”
Verizon executives had repeatedly said that they were evaluating what the hacking disclosures meant for the planned transaction, with some reports saying the company also considered pulling out of the deal altogether.
Verizon’s general counsel Craig Silliman had said: “We have a reasonable basis to believe right now that the impact is material, and we’re looking to Yahoo to demonstrate to us the full impact. If they believe that it’s not, then they’ll need to show us that.”
In mid-December, Yahoo disclosed that a hack had compromised the information of more than 1 billion user accounts. It was the company’s second such disclosure since September, when it reported that a 2014 breach had impacted at least 500 million accounts.
Verizon chairman and CEO Lowell McAdam previously told analysts that there would be “meaningful” financial synergies in the Yahoo deal. After previously buying AOL and Millennial Media and launching millennial-focused mobile video service Go90, Verizon had unveiled its agreement to take over Yahoo in the summer.
Marni Walden, Verizon executive vp and president of product innovation and new businesses, said Tuesday: “We have always believed this acquisition makes strategic sense. We look forward to moving ahead expeditiously so that we can quickly welcome Yahoo’s tremendous talent and assets into our expanding portfolio in the digital advertising space.”
“Verizon and Yahoo will evenly split the future liabilities arising from its two disclosed data breaches,” Wells Fargo analyst Jennifer Fritzsche said in a Tuesday report. “This is especially positive in our view, as it should limit Verizon’s future liability here. Our concern had been once this closed, Yahoo’s problems of the past would be solely on Verizon, now Yahoo will share in this.”
She added: “The Yahoo assets combined with its AOL business should drive both expense and revenue synergies, particularly when paired with Verizon’s 114 million wireless subscribers. The combined Yahoo-AOL businesses would help diversify Verizon away from its core wireless business, although we would note its digital media and advertising business would still be a small percentage of revenues.”
Fritzsche also highlighted: “Verizon would still be a relatively small player in the digital advertising space after the deal closes. According to eMarketer, Yahoo and AOL combined control only 2 percent of global digital advertising revenue, well behind Google at 32 percent and Facebook at 13 percent.”
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