Latest Verizon comments suggest Yahoo deal under threat

14 Oct 2016

Verizon sign. Image: Susan Montgomery/Shutterstock

Verizon has finally commented on the Yahoo breach and its potential effect on any takeover, and it seems to be nothing but bad news to those in Yahoo trying to secure the deal.

The revelations about the enormous data breach experienced by Yahoo has damaged not only the company’s reputation, but one of the deals that would have potentially kept the wolves from the door of the declining company.

Back in July, Verizon agreed a deal to purchase Yahoo’s core search and advertising business for a fee of around $4.8bn. However, since the news that it had been on the receiving end of one of the biggest data breaches of all time, it demanded a discount of around $1bn.

Now, in its first official comment since the breach revelations, Verizon appears to be getting more skittish about the deal and could even jeopardise it from being completed.

According to The Washington Post, Verizon’s general counsel Craig Silliman has said that the impact of the breach on the deal is “material”, meaning that it would harm the value of Yahoo financially, making it less of an attractive purchase.

With the deal having been expected to be completed in the first quarter of 2017, Verizon has said that Yahoo now have to prove to their potential buyer that it has got its house in order to make sure the deal goes ahead.

Material is not immaterial

As Verizon puts it: “We’re looking to Yahoo to demonstrate to us the full impact they believe it’s not [material]”, but has added that it is “confident in Yahoo’s value and we continue to work toward integration with Verizon”.

While Verizon’s own investigation into the breach is only just over halfway complete, the company has said the accusations that it was a potentially state-sponsored attack changes nothing.

“The question … ‘is it a state-sponsored attack?’ isn’t really relevant in terms of what we’re looking at,” Silliman said. “The question is whether this [had] a material or an adverse effect on the asset we are buying.”

Based on the comments of Verizon, BTIG telecom analyst Walt Piecyk has said that by being ‘material’, the company could potentially halt the acquisition if it wished.

Verizon sign. Image: Susan Montgomery/Shutterstock

Colm Gorey was a senior journalist with Silicon Republic