Verizon Communications Inc. has emerged as the most likely buyer of Yahoo! Inc. in a deal worth $4.8 billion, after months of leaks and speculation.
Under the deal, Verizon will get Yahoo’s online assets including search, mail and instant messaging, along with its ad technology. Various real estate holdings will also be included.
As one of the largest US carriers, Verizon faces market saturation and limited growth prospects in its traditional business. Its purchase of Yahoo, which follows its acquisition of AOL in May 2015, provides more evidence that it sees online content and advertising as a primary way to increase growth.
Yahoo has millions of users, a collection of websites including Flickr, Tumblr and Yahoo Finance and Sports and some useful digital-ad tech like Flurry and BrightRoll. Together with AOL, the new Yahoo under Verizon may have a better chance of competing in a digital ad market dominated by two big players.
With the wireless industry maturing, Verizon has been buying up internet and advertising technology companies, including AOL, and presenting itself as the best bet to take on Alphabet Inc.’s Google and Facebook Inc. in mobile advertising.
After more than three years at the helm without delivering on a turnaround strategy, Yahoo’s Chief Executive Officer Marissa Mayer has finally bowed to rising shareholder anger after the collapse of a plan to spin off Yahoo’s stake in Alibaba Group Holding Ltd. in a way that would minimize the tax impact for investors.
Alibaba, the largest e-commerce provider in China, emerged as the most valuable piece of Yahoo, and investors were seeking a way to realize some of those gains. After U.S. regulators failed to give prior approval for the transaction’s tax status, Yahoo was forced to jettison the plan.
Many speculate that Yahoo’s current downfall is because it did not quickly adapt to the changing internet landscape as the company failed to make anything substantial out of its existing acquisitions.
Around 2005, Microsoft was after Yahoo for a good 3 years with its last and final offer being $44.6 billion in cash and stock. An offer which Yahoo called “substantially undervaluing.”
What remains of Yahoo today is, is just Flickr. Yahoo is only known for its headlines, whenever it appears in the news. The company had a much better chance of survival with Microsoft back in 2008. Even LinkedIn got $26.2 billion.