Yahoo to be sold for just $6.45bn
Yahoo’s board has approved a deal to sell its core business to US communications company Verizon for a fraction of its former value, marking the end of the road for one of the first dotcom success stories.
Verizon has arranged to acquire Yahoo’s operating business for around US$4.83 billion ($6.45 billion) in cash, a modest sum for a company once valued at around US$125 billion at its peak.
After the transaction, Yahoo will be left with around US$41 billion worth of investments in Chinese internet giant Alibaba, Yahoo Japan and a modest patent portfolio. The company intends to change its name and become a publicly traded investment company.
Verizon plans to integrate Yahoo’s operations with those of AOL, a former dial-up ISP turned content company that Verizon acquired for US$4.4 billion in 2015, and use the combined business to become a major mobile media company and accelerate its digital advertising business.
Announcing the deal, Verizon said Yahoo has a global audience of more than 1 billion monthly active users, including 600 million monthly active mobile users.
Yahoo began life as a content portal, but came to find itself overshadowed by more nimble rivals including Google and Facebook.
Efforts to restore the company to its former glory, including the high-profile appointment of former Google executive Marissa Mayer as CEO, have not satisfied investors, with some agitating for a sale.
Under Mayer’s tenure the company spent $1.1 billion to acquire blogging network Tumblr, but has since written down most of its value, and other big bets also failed to deliver the desired results.
Mayer’s predecessor, Yahoo co-founder Jerry Yang, famously turned down a $44.6 billion takeover offer from Microsoft in 2008.
“Yahoo is a company that has changed the world, and will continue to do so through this combination with Verizon and AOL,” Mayer said in a statement.
“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.”
Subject to approvals the transaction is expected to close in the first quarter of next year.
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