Today, Verizon announced it would acquire Yahoo's operating business for approximately $4.83 billion, although the amount that will be paid is subject to slight adjustments before the deal is closed. This amount is far lower than the $45 billion Microsoft offered to acquire the company back in 2008, a deal which Yahoo rejected in an attempt to negotiate for an even better deal. Although Yahoo CEO Marissa Mayer supports the acquisition, it will still require the approval of Yahoo shareholders for the deal to be finalized.
With this acquisition, Verizon hopes to expand its digital media empire, and in particular, to dominate on mobile platforms. By Yahoo's internal metrics, the company has 1 billion monthly users, including 600 million mobile users, who make use of the company's search engine, communications products, and digital media. Verizon also praises Yahoo for its "streamlined advertising technology" that "connects advertisers with target audiences."
Following the acquisition, Yahoo will be integrated with AOL, a previous acquisition by Verizon. When the two companies are combined, Verizon believes they will have "an unrivaled roster of the world’s most beloved brands." Together, AOL and Yahoo have over 25 brands. Some of Yahoo's biggest assets are digital media brands in the fields of finance, news and sports. The company also has an email platform with approximately 225 million active users.
Concerning the acquisition by Verizon and the integration with AOL, Mayer stated, "Yahoo and AOL popularized the Internet, email, search and real-time media. It’s poetic to be joining forces with AOL and Verizon as we enter our next chapter focused on achieving scale on mobile." Verizon Chairman and CEO Lowell McAdam stated, "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." AOL CEO Tim Armstrong said, "We have enormous respect for what Yahoo has accomplished: this transaction is about unleashing Yahoo’s full potential, building upon our collective synergies, and strengthening and accelerating that growth."
This acquisition does not include Yahoo's cash or its shares in Alibaba or Yahoo Japan, nor does the deal include minority investments Yahoo has made in several other companies. These assets will continue to be held by Yahoo. After the acquisition is closed, Yahoo will change its name and become a registered investment company. Yahoo will release more details the investment company in the future.
Is this acquisition a good move for Verizon? Is it a smart idea for Yahoo to accept? Leave your comments below.