Verizon to buy Yahoo in $4.8bn deal

25 Jul 2016

Verizon to buy Yahoo for $4.8bn

American telecoms giant Verizon is to buy Yahoo’s core search and advertising businesses for $4.8bn. The news is expected to be confirmed today.

The board of the Silicon Valley firm that helped ignite the internet revolution in the 1990s has agreed to sell Yahoo’s core internet operations and land holdings to Verizon Communications.

CEO Marissa Mayer will receive a severance package of $57m.

Following the sale, Yahoo shareholders will be left with about $41bn in investments in the Chinese e-commerce player Alibaba, according to The New York Times.

Shareholders will also hold investments in Yahoo Japan and a small portfolio of patents.

The takeover will double the size of Verizon’s digital advertising business, putting it in third place in the global $200bn digital advertising market, behind Google and Facebook.

Just over a year ago, Verizon acquired AOL – another early mover in the internet revolution – for $4.4bn.

Internet pioneer

Yahoo was founded in 1994 as a directory of websites, and soon became a portal destination for email, search, shopping, news and finance.

However, the company was eventually eclipsed by Google, and then Facebook.

An offer by Microsoft to buy Yahoo for $46.6bn in 2008 was rejected by the company’s management team.

Former Google executive Marissa Mayer was then brought on board to turn the Yahoo ship around.

Mayer struck at the task with considerable energy, ending wasteful work practices and focusing the company on opportunities in mobile and re-inventing Yahoo.

However, despite her best efforts, Yahoo continued to lurch from setback to setback.

Yahoo came under pressure from investors – like Starboard Value – for changes at the company, including a proposed merger with AOL that Mayer is believed to have rejected.

In the end, it appears Yahoo and AOL will be key components in Verizon Communications’ plans to be a considerable force in the wireless world, with commercial efforts bolstered by content and advertising.

Yahoo image via Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years