US telecom giant Verizon Communications has bought Yahoo’s search and advertising operations for $4.83 billion in a deal seen as a logical extension of the company’s $ 4 billion deal last year to acquire AOL in a bid to become a top global mobile media company.
Lowell McAdam, Verizon Chairman and CEO said at the announcement of the merger, “Just over a year ago we acquired AOL to enhance our strategy of providing a cross-screen connection for consumers, creators and advertisers. 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.”
Interestingly Tim Armstrong, CEO of AOL, who was involved in the acquistion negotiations is a former colleague of Yahoo CEO Marissa Mayer when both of them used to work for Google.
“Combining Verizon, AOL and Yahoo will create a new powerful competitive rival in mobile media, and an open, scaled alternative offering for advertisers and publishers,” Armstrong said.
Mayer, who has stated her intention to stay on at the company, said, “It’s important to me to see Yahoo into its next chapter.”
In a statement to Yahoo employees, she said, “Yahoo is a company that changed the world. Before Yahoo, the Internet was a government research project. Yahoo humanized and popularized the web, email, search, real-time media, and more.”
Mayer had taken over as CEO of Yahoo in July 2012. In a bid to turn around the company, she had initiated several acquisitions, including a deal to buy online blogging forum Tumblr for $1.1 billion. She also oversaw a redesign of Yahoo’s homepage and made mobile services a top priority. As part of her latest turnaround plan, Mayer had laid off 15% of Yahoo’s workforce and closed unprofitable services.
“We set out to transform this company – and we’ve made incredible progress. We counteracted many of the tectonic shifts of declining legacy businesses, and built a Yahoo that is unequivocally stronger, nimbler, and more modern,” Mayer said.
“We tripled our mobile base to over 600 million monthly users, we invested in and built Mavens from basically zero in 2011 into $1.6B of GAAP Revenue in 2015, we streamlined and modernized every aspect of our consumer products, and, with Gemini and BrightRoll, we dramatically improved our advertiser products. This only scratches the surface of what we’ve achieved… and we all know how much hard work it took to get here,” she added.
Describing the sale as not only an important step in plans to unlock shareholder value for Yahoo, Mayers said it was also a great opportunity for Yahoo to build further distribution and accelerate work in mobile, video, native advertising, and social.
With more than 100 million wireless customers, a shared view of the importance of mobile and video ad tech, a deep content focus through AOL, Verizon brings clear synergies to the table, she said.
“And with their aggressive aims to grow global audience to 2B users and $20B in revenue within the mobile-media business by 2020, Yahoo’s products and brand will be central to achieving these goals. Joining forces with AOL and Verizon will help us achieve tremendous scale on mobile. Imagine the distribution challenges we will solve, the scale we will achieve, the products we will build, and the advertisers we will reach now with Mavens – it’s incredibly compelling, “ Mayers said.
Yahoo will be selling off its email service and its news, finance and sports websites along with its advertising tools like Brightroll, Flurry and Gemini.
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These businesses will be integrated with AOL and placed under Marni Walden, EVP and President of the Product Innovation and New Businesses organization at Verizon. The deal is expected to close in Q1 2017.
The deal would allow Yahoo to separate its main assets from its holdings in Chinese internet giant Alibaba, which accounts for most of Yahoo’s $37 billion market value.
Yahoo, a pioneer in the early Internet era, had a valuation of more than $100 billion before the dot-com collapse in 2000. It had in 2008 spurned a $44 billion bid from Microsoft. (Image Courtesy : www.isveiscidavalari.com )