Ending weeks of speculation, Verizon Communications confirmed its agreement on Monday to acquire web search, e-mail, digital content, and other core assets owned by Yahoo, Inc. as part of a cash deal valued at $4.83 billion. Monday’s acquisition caps an auction process for the Yahoo assets that began earlier this year and featured AT&T and various private equity firms among the bidders. When combined with Verizon’s $4.4 billion purchase of AOL last year, the Yahoo deal, in the words of Verizon CEO Lowell McAdam, “will put Verizon in a highly competitive position as a top global media company.”
According to Verizon, the web-related assets covered by the deal encompass more than one billion monthly active users of Yahoo, including 600 million monthly active mobile users and e-mail services with 225 million monthly active users. At closing, Verizon said it would integrate Yahoo with AOL to create “one of the largest portfolios of owned and partnered global brands with extensive distribution capabilities.”
Yahoo, which plans to retain stakes in Yahoo Japan, Chinese e-commerce giant Alibaba Holdings and a portfolio of non-core patents, will change its name and convert its structure to a registered, publicly-traded investment company. The former web services giant (which recorded a market capitalization of $125 billion at the height of the dot.com boom in 2000) also announced that it will “return substantially all of its net cash to shareholders and will determine and communicate a specific capital returns strategy at an appropriate time.”
Speaking to reporters, Yahoo CEO Marissa Meyer lauded Yahoo as “a company that has changed the world” and that “will continue to do so through this combination with Verizon and AOL.” Adding, “this transaction also sets up a great opportunity for Yahoo to build further distribution and accelerate our work in mobile,” Meyer proclaimed it “poetic to be joining forces with AOL and Verizon as we enter our next chapter focused on achieving scale on mobile.” Contingent upon receipt of shareholder and regulatory approvals, the companies expect to complete the transaction during the first quarter of 2017.