Verizon close to finalising deal to buy Yahoo’s internet businesses for around $5 bn

23 Jul 2016

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US telecom giant Verizon is close to finalising a deal to buy the core business of internet company Yahoo for around $5 billion, Bloomberg yesterday reported, citing people familiar with the matter.

 
Verizon, run by CEO Lowell McAdam (left) and Yahoo CEO Marissa Mayer  
Verizon, which has a market cap of about $228 billion, could announce a deal in the next few days, the report said.

Verizon, run by CEO Lowell McAdam, will buy Yahoo's Web assets and integrate it into its fledgling digital media business, which includes AOL properties it acquired last year for $4.4 billion.

A deal would include Yahoo's portal, search engine and properties like Yahoo Mail, Yahoo Sports and Tumblr, but will not include Yahoo's over 3,000 patents and office buildings.

Verizon plans to make video services and online advertising its next growth engine and by buying Yahoo Web assets, it would be a able to better compete with Web giants like Google and  Facebook, according to analysts.

Marissa Mayer had over the past few years tried to turn around the lagging company, focusing on video, mobile and social initiatives. She had also acquired more than 50 startups, including blogging site Tumblr for $1.1 billion in 2013 and had to later write down more than $600 million of Tumblr's value.

These efforts had failed to boost Yahoo's business, and the company was forced to look at a sale after three decades of independent existence.

Meanwhile, though Mayer was elected to Yahoo's board of directors at the company's shareholder meeting last month, investors managed to send a strong signal of their disapproval of the chief executive.

Mayer received the least number of votes among Yahoo's director nominees, and most votes against her board seat. On the whole, around 105 million votes were cast in opposition to Mayer's election to the board, an SEC filing showed.

Last month's Yahoo election contrasted sharply to the one in 2015, when Mayer received the second-highest number of votes for Yahoo's board, but at the time, an Alibaba spinoff had still seemed promising.

Yahoo's fading fortunes, and growing unrest over the turnaround plan of Mayer, led to the auction after mounting pressure from activist shareholders, including hedge fund investor Starboard Value.

Despite an online audience of up to 1 billion, Yahoo faces withering competition from Google, Facebook and others for digital advertising.

Most of Yahoo's $37 billion market cap comprises its stakes in Alibaba Group Holding and Yahoo Japan.

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