Verizon confirms Yahoo acquisition – plans mobile ads behemoth

25 Jul 201629 Shares

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Verizon has Facebook and Google in its sights for domination of the mobile ads market

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It’s official – Yahoo is to be acquired by Verizon for $4.83bn in cash as part of a move by the latter to create a community of 1bn mobile users.

The acquisition, which was rumoured over the weekend, will see Verizon combine Yahoo with AOL, which it acquired last year, to create a digital advertising giant.

The acquisition will see Verizon gain 600m monthly active mobile users as well as a powerful advertising technology stack combining data, content and technology.

‘Yahoo is a company that has changed the world, and will continue to do so through this combination with Verizon and AOL’
– MARISSA MAYER, YAHOO

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

“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.”

Yahoo to be integrated with AOL in new internet order

Yahoo will be integrated with AOL under Marni Walden, executive vice-president and president of the Product Innovation and New Businesses organisation at Verizon.

The deal is subject to approval by Yahoo’s shareholders and regulatory rules.

‘Combining Verizon, AOL and Yahoo will create a new powerful competitive rival in mobile media, and an open, scaled alternative offering for advertisers and publishers’
– TIM ARMSTRONG, AOL

In an email to employees, Yahoo CEO Marissa Mayer told employees that she intends to stay on with the company.

“Yahoo is a company that has changed the world, and will continue to do so through this combination with Verizon and AOL,” Mayer wrote.

“The sale of our operating business, which effectively separates our Asian asset equity stakes, is an important step in our plan to unlock shareholder value for Yahoo. This transaction also sets up a great opportunity for Yahoo to build further distribution and accelerate our work in mobile, video, native advertising and social.”

Combined, AOL and Yahoo will have more than 25 brands in their portfolio. This includes Yahoo’s email service, which has 225m active users.

The acquisition also includes Yahoo’s Brightroll programmatic ads platform, its mobile apps analytics service Flurry, and Gemini, its native and search advertising platform.

“We have enormous respect for what Yahoo has accomplished: this transaction is about unleashing Yahoo’s full potential, building upon our collective synergies, and strengthening and accelerating that growth,” said Tim Armstrong, CEO of AOL.

“Combining Verizon, AOL and Yahoo will create a new powerful competitive rival in mobile media, and an open, scaled alternative offering for advertisers and publishers.”

The acquisition ends a long-running saga that began in 2008 when Microsoft offered to buy the internet pioneer for $44.6bn. Dithering by the then management led to Microsoft walking away from the table.

Unhappy shareholders ousted the original management team led by Jerry Yang and placed Carol Bartz as CEO. She was then replaced by Scott Thompson.

In 2012 former Googler Marissa Mayer was brought in to steady the ship and, the following year, Yahoo acquired Tumblr for $1.1bn.

Despite Yahoo’s successful investment in Alibaba – estimated to be worth $41bn – and steady moves into mobile, the company continued to struggle.

Mayer rejected a proposed merger with AOL last year after coming under pressure from investors such as Starboard Value. Now, Yahoo and AOL are both key components of Verizon’s ambitions to finally see telcos rather than internet giants like Google and Facebook make money from mobile advertising.

Verizon image via Shutterstock

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Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com