Verizon, U.S. telecoms giant, has announced its acquisition of Yahoo, the online behemoth, for $4.8 billion.
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.”
However, 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 22, 2016, Yahoo’s 15 per cent stake of Alibaba represented $31.2 billion, and its 34 per cent 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 a source.
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 mentioned Marissa Mayer in his memo.
“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.
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.