Buiness News: Verizon is winner in Yahoo sale with $4.8B bid

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July 25, 2016

Verizon has made it official. The telecommunications giant announced Monday that it will acquire Yahoo's core business for $4.8 billion.

Verizon Fios recently sent out an e-mail letting customers with older routers know that they will need to either pay a $2.80 monthly fee or buy a new router.

July 25, 2016

Verizon has made it official. The telecommunications giant announced Monday that it will acquire Yahoo's core business for $4.8 billion.

Verizon Fios recently sent out an e-mail letting customers with older routers know that they will need to either pay a $2.80 monthly fee or buy a new router.

Verizon has been the leading candidate in Yahoo's four-month sale process. By pairing Yahoo with AOL, which Verizon bought in May 2015 for $4.4 billion, Verizon's resulting Net media unit could represent a more competitive option for digital advertisers after Google and Facebook.

“Just over a year ago we acquired AOL to enhance our strategy of providing a cross-screen connection for consumers, creators and advertisers," said Verizon CEO Lowell McAdam. "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 will be integrated with AOL under Marni Walden, Verizon's executive vice president and president of the product innovation and new businesses organization.

Verizon's acquisition of Yahoo's operating business — that includes advertising technology and popular online content such as Yahoo Sports, Yahoo Finance and Tumblr — leaves Yahoo with its 15% stake in Chinese retailing giant Alibaba (BABA), worth $32 billion, and its 36% stake in Yahoo Japan, worth about $8 billion.

When the transaction is closed — expected to happen in the first quarter of 2017 — Yahoo will change its name and become a publicly traded investment company, the company said.

Shares of Verizon (VZ) were up 0.05% in pre-market trading to $56.13. Yahoo (YHOO) shares were down 0.74% to $39.09.

While many Wall Street observers had predicted that CEO Marissa Mayer would exit with a Yahoo sale that appears not to be the case. "For me personally, I’m planning to stay," Mayer said in a note on Yahoo's Tumblr page. "I love Yahoo, and I believe in all of you. It’s important to me to see Yahoo into its next chapter."

A former Google exec, Mayer four years ago came to Yahoo — one of the original Web portals and Net search destinations — to captain a turnaround. Despite Yahoo growing its mobile advertising business under Mayer's tenure, the company is expected to earn a dwindling share of a growing global digital ad market, according to research firm eMarketer. Yahoo's share of the $187 billion market is expected to drop from 1.5% in 2015 to 1.3% this year, the research firm projects.

“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 accompanying the sale announcement. "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.” 

Verizon acquired AOL in part for its online advertising technology, which can be used online and on mobile video services such as Verizon's free ad-supported go90 network, launched in October 2015, that streams millennial-focused TV, sports and other content to smartphones and mobile devices.

In addition to its valuable ad tech, Yahoo also has popular online content such as Yahoo Sports, Yahoo Finance and Tumblr, the blogging service it acquired in 2013 for $1.1 billion. Across its various properties, Yahoo draws 1 billion monthly users.

Verizon has been circling Yahoo for months. In December 2015, Verizon CEO Lowell McAdam and CFO Fran Shammo said the company would look at Yahoo should it go up for sale. "At the right price I think marrying up some of their assets with AOL under Tim Armstrong's leadership would be a good thing for investors," McAdam told CNBC's Jim Cramer in February.


Courtesy: USA Today