Verizon has bought embattled online player Yahoo for USD$4.8 billion, with the communications giant building up its offering to compete with the likes of Google and Facebook.
The all cash deal, comes a year after Verizon bought AOL for USD$4.4bn, with Verizon now adding all of Yahoo's consumer services such as its search, news, sport, finance as well as its social player Tumblr to an offering that includes AOL as well as sites like The Huffington Post.
By bringing Yahoo into the fold, Verizon not only cements its position as one of the biggest communications companies globally, but it now can go toe-to-toe with Google and Facebook when it comes to users and also for ad dollars.
The writing has been on the wall for Yahoo for some time, with reports coming in thick and fast last week that the business was set to name a buyer imminently. Last week the online player revealed its quarter two results with the business reporting a revenue decline of 19% compared to its last quarter.
Other players said to be lining up for Yahoo were fellow communications player AT&T and an investment group that is comprised of private equity firms and is backed by Warren Buffett.
The winning bid of AUD$6.4bn is a shadow of what other businesses had previously offered for Yahoo during its boom, with Microsoft offering USD$44bn for the business in 2008.
In a statement released overnight, AOL described the Yahoo acquisition as a “huge win”.
“This is a huge win for Verizon, AOL and Yahoo – but more importantly, it’s a win for consumers, clients and creators who are at the heart of everything we do.
“As we embark on this new partnership and work towards an expected close in the 4th quarter of 2016 or early 2017, we remain committed to delivering the highest possible value.”
When it comes to the fate of current Yahoo chief executive, Marissa Mayer, it is currently unclear if she'll stay on at the company after the deal is completed in early 2017. If she is terminated, it has been reported that her payout will hit the USD$57 million mark.
Locally Yahoo7 has said it's “business as usual”, with the business remaining focused on its 2016 strategic plan. Seven West Media has also released a statement outlining that the venture between Seven and Yahoo has been “a very successful one” and it also reiterated that until the deal closes the joint-venture remains unchanged.
However it does outline that Seven West Media has an option to negotiation with Verizon about the JV.
“Seven West Media will have an opportunity, in the period between being formally notified of a transaction and final completion, to consider which options it selects or a combination as may be negotiated with the new owners of Yahoo, Inc that creates the most value for Seven West Media shareholders.”
“Until completion of any change of control of Yahoo, Inc, which Seven West Media understands may take six to nine months in the nature of large and complex transactions, it is business as usual at Yahoo7 here in Australia and New Zealand.”
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