Yahoo to be bought out by Verizon for $4.83 billion


Yahoo Verizon

It was expected, as several reports already indicated its possibility. Early Monday morning came the news that has shaken the internet community, however not shocked. Today Verizon announced that it will be buying Yahoo for a mere $4.83 billion. I say “mere” as the couple billion is a huge discount for Verizon, as Yahoo was offered a $44.6 billion offer by Microsoft in 2008. But why the 90% discount you might ask? The truth is that since the offer in 2008 the company has clearly fallen into a dark hole filled with failed products and disappointed staff. The buyout by Verizon could have been the best option left for internet giant to be operational.

Verizon also announced in a press release that Yahoo will, at some point, become integrated with Aol. If you don’t remember, Aol was acquired last year by the service provider for $4.4 billion.

Under the deal, Yahoo will hand over control of its online presence and its 1 billion users to Verizon, along with its advertising platform. However, the deal does not include Yahoo’s recent stake in Alibaba or Yahoo Japan, these parts of the company will remain under Yahoo until it changes its name and separates from the once parent company. They will be a separate publicly traded entity.

When the press release came out the internet community and the tech world had their eyes on one person – Marissa Mayer. The once Google employee turned Yahoo CEO released a letter to her employees via Tumblr. Some of the main highlight’s from her letter included that she will be staying with Yahoo, as Mayer wrote “For me personally, I’m planning to stay. I love Yahoo, and I believe in all of you. It’s important to me to see Yahoo into its next chapter.” She also clarified how the acquisition by Verizon will help Yahoo by explaining that the deal “will help us achieve tremendous scale on mobile.”

The deal has not gone through yet, as it is yet to be approved by shareholders and regulators of Yahoo. However, usually in the case of such acquisitions it takes time, but eventually does go through. In the press release Verizon said Yahoo “will continue to operate independently,” until the deal is completed in the first quarter of 2017.

The acquisition of Yahoo is an emotional blow for employees and the internet community. The company was first of its type and began in a time when the internet was just starting off. For many who have used the internet since the beginning would have used Yahoo at some point.

Here is the letter Marissa Mayer posted on Tumblr

Dear Yahoos,

Moments ago, we announced an agreement with Verizon to acquire Yahoo’s operating business. This culminates a rigorous, thorough process over many months, and yields a great outcome for the company. Today’s announcement not only brings us an important step toward separating Yahoo’s operating business from our Asian asset equity stakes, it also presents exciting opportunities to accelerate Yahoo’s transformation. Among the many entities that showed interest in Yahoo, Verizon believed most in the immense value we’ve created, and in what a combination could bring our users, our advertisers, and our partners.

This is a good moment to reflect on Yahoo’s journey to date.

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.

What really sets Yahoo apart is the shared passion to create great products for our 1B+ users, and in doing so, transforming the world for the better. You can clearly see that spirit, that commitment, that fight in the work we’ve done together over the past few years. 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. 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.

It’s because of that hard work and resilience, that Yahoo will realize amazing opportunities in its next chapter.

This sale is not only an important step in our plan to unlock shareholder value for Yahoo, it is also a great opportunity for Yahoo to build further distribution and accelerate our work in mobile, video, native advertising, and social. As one of the largest wireless and cable companies in the world, Verizon opens the door to extensive distribution opportunities. 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. 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.  

The strategic process has created a lot of uncertainty, but our incredibly loyal and dedicated employee base has stepped up to every challenge along the way. Through the first half of the year, we met our operational goals and overachieved on plan. But, further, there are things that you cannot measure, like the passion of the people behind the products. The teams here have not only built incredible products and technologies, but have built Yahoo into one of the most iconic, and universally well-liked companies in the world. One that continues to impact the lives of more than a billion people. I’m incredibly proud of everything that we’ve achieved, and I’m incredibly proud of our team. For me personally, I’m planning to stay. I love Yahoo, and I believe in all of you. It’s important to me to see Yahoo into its next chapter.

As we work to close this agreement in Q1 2017, it’s more important than ever that we come together as one global team to continue executing on our strategic plan through the remainder of the year. We have delivered the first half of the year with pride, achieving our goals. Now, it is up to us to make Yahoo’s final quarters as an independent company count.

Yahoo is a company that changed the world.  Now, we will continue to, with even greater scale, in combination with Verizon and AOL.

Thanks,

Marissa

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