📺 Stream EntrepreneurTV for Free 📺

Verizon Buys Yahoo's Core Business for Nearly $5 Billion The purchase will boost Verizon's AOL internet business, which it bought last year for $4.4 billion, as it gains access to Yahoo's ad technology tools.

By Reuters

entrepreneur daily

This story originally appeared on Reuters

Jonathan Weiss | Shutterstock

Verizon Communications Inc. said on Monday it would buy Yahoo Inc.'s core internet properties for $4.83 billion in cash to expand its digital advertising and media business, ending a lengthy sale process for the fading Web pioneer.

The purchase will boost Verizon's AOL internet business, which it bought last year for $4.4 billion, as it gains access to Yahoo's ad technology tools, BrightRoll and Flurry, and search, mail and messenger assets.

"Yahoo gives us scale that is what is most critical here, Marni Walden, who is head of product innovation and new business at Verizon told CNBC, adding that the company's audience will go from the millions to the billions. "We want to compete and that is the place we need to be."

In a Tumblr blog post, Yahoo Chief Executive Officer Marissa Mayer said she planned to stay at Yahoo, but Walden, who will head the combined company, told CNBC the new leadership team has yet to be determined.

"It's a decade of mismanagement that has finally ended for Yahoo," said Recon Analytics analyst Roger Entner. "It's the continuation of an extension of Verizon's strategy toward becoming a wireless internet player and a move away from (telecom) regulation for Verizon into an unregulated growth industry."

The deal, expected to close in early 2017, marks the end of Yahoo as an operating company, leaving it with a 15 percent stake in Chinese e-commerce company Alibaba Group Holding Ltd. and a 35.5 percent interest in Yahoo Japan Corp.

Verizon, the No. 1 U.S. wireless operator, has in recent years looked to mobile video and advertising for new sources of revenue in an oversaturated wireless market. It has also scaled back on its Fios TV and internet service.

Verizon could combine data from AOL and Yahoo users in addition to its more than 100 million wireless customers to create data to help advertisers specifically target users based on online behavior and preferences.

Yahoo will continue as an independent company until the deal receives shareholder and regulatory approvals, the companies said.

The sale does not include Yahoo's cash, its shares in Chinese e-commerce giant Alibaba Group Holding Ltd., shares in Yahoo Japan, Yahoo's convertible notes, certain minority investments or Yahoo's non-core patents.

The Alibaba and Yahoo Japan investments are worth about $40 billion in terms of their market capitalizations, while Yahoo had a market value of about $37.4 billion as of Friday's close.

Verizon prevailed over rival bidders for Yahoo, including AT&T Inc.; a group led by Quicken Loans founder Dan Gilbert and backed by billionaire Warren Buffett; private equity firm TPG Capital Management LP; and a consortium of buyout firms Vector Capital and Sycamore Partners.

Analysts at Mizuhou said the deal's price tag was largely in line with expectations at $5 billion.

Under pressure from activist investor Starboard Value LP, Yahoo launched an auction of its core business in February after shelving plans to spin off its stake in Alibaba.

In premarket trading, shares of Verizon were up 0.6 percent at $56.41, while shares of Yahoo dipped about 1 percent at $39.12.

(Reporting by Anya George Tharakan in Bengaluru; Editing by Bernadette Baum and Jeffrey Benkoe)

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Side Hustle

These Coworkers-Turned-Friends Started a Side Hustle on Amazon — Now It's a 'Full Hustle' Earning Over $20 Million a Year: 'Jump in With Both Feet'

Achal Patel and Russell Gong met at a large consulting firm and "bonded over a shared vision to create a mission-led company."

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Business News

These Are the 10 Most Profitable Cities for Airbnb Hosts, According to a New Report

Here's where Airbnb property owners and hosts are making the most money.

Side Hustle

How to Turn Your Hobby Into a Successful Business

A hobby, interest or charity project can turn into a money-making business if you know the right steps to take.

Starting a Business

This Couple Turned Their Startup Into a $150 Million Food Delivery Company. Here's What They Did Early On to Make It Happen.

Selling only online to your customers has many perks. But the founders of Little Spoon want you to know four things if you want to see accelerated growth.