Verizon buys Yahoo for $4.8 billion

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On Monday 25th July 2016, Verizon, a New York-based telecommunication company announced the agreement to purchase search engine and web pioneers Yahoo for $4.83 billion. The announcement ended speculation after six months of a carefully scrutinised sale process. Verizon was considered to be a front-runner since Yahoo started exploring the sale of its core business. The telecommunication giant had already acquired AOL, another ailing internet giant on the verge of collapse. Yahoo’s purchase puts Verizon among the top international media mobile firms and will help increase income in stream digital marketing.

Yahoo has received numerous bids from a lot of buyers since it put itself up for sale in February this year. Some of these buyers comprised of Quicken Loans founder Dan Gilbert, who was being funded by Warren Buffett, the Berkshire Hathaway CEO, private equity companies TPG and Vector Capital Management and AT&T. There as many as forty companies bidding for Yahoo at one point. On Saturday, Yahoo notified other bidding companies that Verizon had secured the deal. This is the end of Yahoo as an independent company since it began as an internet directory in 1995. This directory played a significant role in the development of internet by making it accessible to ordinary people and teaching them how to surf the Internet for information, entertainment, news and sports. Verizon will acquire Yahoo's core internet business as well as the company's advertising technology. Yahoo’s primary internet business is mainly comprised of iconic web products such as Yahoo search, photo storage site Flickr, Yahoo Mail and Fantasy Sports which will all be owned by Verizon.

Verizon is the largest network provider in the US with over 97% coverage in the country, and their plan is to integrate Yahoo with their previous acquisition AOL. The combination of Yahoo, AOL and Verizon will be aimed at creating a digital advertisement platform to compete with giants Facebook and Google. The two are currently the leading marketing websites with a combined percentage of 43% of the total sales. Verizon’s tactics have raised questions since they want to target millennials with products such as Go90 mobile video service, but Yahoo users are mostly older people. The key buyout for Verizon is yahoo’s valuable advertising technology in addition to the 1 billion monthly visitors of yahoo’s combined properties. 

The acquisition doesn’t include all Yahoo corporate assets; it is mainly centred on Yahoo’s operating business. On its release notes, Verizon excludes yahoo’s non-core patents, certain minority investments, Yahoo’s convertible notes, Yahoo Japan, Alibaba group holding and yahoo’s cash. Yahoo will retain some of these assets and according to news releases, Yahoo will form a new public traded company under a new name and invest in these assets.

Analysts say that Verizon is planning to use wireless customer location data to support its ad business in a bid to challenge Google and Facebook in digital mobile advertising platform. Yahoo CEO Marissa Mayer claims she is not planning to leave the company after the Verizon takeover.

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