Its official, Yahoo is no longer a stand-alone company! Its years of dominance finally came to an end today with the announcement that Verizon, the US telecoms giant has bought the online behemoth for a tidy $4.8billion.
The deal is not too much of a loss for the money-making shareholders of Yahoo as they would be allowed to keep proceeds of stakes in high end companies like Alibaba which are not part of this deal.
Verizon which owns AOL by acquiring Yahoo’s core business for $4.83 billion will benefit from Yahoo’s advertising, content, search and mobile activities.
“Just over a year ago we acquired AOL to enhance our strategy of providing a cross-screen connection for consumers, creators and advertiser,” Verizon Chairman and CEO Lowell McAdam said in a release.
“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’s stakes in Alibaba and Yahoo Japan aren’t part of the acquisition.
These stakes are worth tens of billions of dollars alone. As of Friday July 22nd, Yahoo’s 15 percent stake of Alibaba represented $31.2 billion, and its 34 percent of Yahoo Japan was worth $8.3 billion. Yahoo’s patent portfolio, which is worth around $1 billion, isn’t part of the sale either. Yahoo’s Sunnyvale headquarters are part of the acquisition, according to sourcea.
Yahoo will be integrated with AOL, and Verizon EVP and President of the Product Innovation and New Businesses organization Marni Walden is going to lead the process. AOL CEO Tim Armstrong also mentions Marissa Mayer in his memothough. “For me personally, I’m planning to stay. I love Yahoo, and I believe in all of you. It’s important to me to see Yahoo into its next chapter,” Mayer wrote in an internal Yahoo memo. The transaction is expected to close in Q1 2017.
“Yahoo is a company that has changed the world, and will continue to do so through this combination with Verizon and AOL. 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,” Marissa Mayer said in the release.
“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. Yahoo and AOL popularized the Internet, email, search and real-time media. It’s poetic to be joining forces with AOL and Verizon as we enter our next chapter focused on achieving scale on mobile. We have a terrific, loyal, experienced and quality team, and I couldn’t be prouder of our achievements to date, including building our new lines of business to $1.6 billion in GAAP revenue in 2015. I’m excited to extend our momentum through this transaction.”
Once the deal closes, Verizon wants to merge Yahoo and AOL to form a bigger advertising and media subsidiary. This way, AOL gets more scale and reaches enough internet and mobile users to become an advertising giant reaching hundreds of millions or even billions of people.
Eventually, Verizon wants to compete with Google and Facebook when it comes to advertising.
When Marissa Mayer joined Yahoo in July 2012, she had big plans to make Yahoo relevant again. She doubled down on mobile, made dozens of acqui-hires, acquired Tumblr for $1.1 billion, acquired Brightroll for $640 million and revamped key products, such as Yahoo Mail, Flickr, Yahoo Weather and Yahoo Messenger.No one is sure of Mayer’s future or the thousands of Yahoo Staff.