Telecommunications firm Verizon has confirmed it is buying Yahoo’s core internet properties.
The deal brings to an end a lengthy sale process by Yahoo, an internet pioneer but recently a mere shadow of its former self although it still has one billion monthly users for its mail and news and sports content.
“It’s a decade of mismanagement that has finally ended for Yahoo,” said Recon Analytics analyst Roger Entner. “It’s the continuation of an extension of Verizon’s strategy toward becoming a wireless internet player and a move away from (telecom) regulation for Verizon into an unregulated growth industry.”
Not included in the deal are the company’s most valuable assets – a 15 percent stake in Chinese e-commerce giant Alibaba and its 35 percent interest in Yahoo Japan, together worth around $40 billion (36.4 billion euros) along with the $7.7 billion (7 billion euros) Yahoo currently has in cash.
The purchase is to expand Verizon’s digital advertising and media business. But even adding Yahoo to its existing internet business AOL, Verizon will still be far behind juggernauts Google and Facebook.
Verizon, the top US wireless operator, has in recent years looked to mobile video and advertising for new sources of revenue in an oversaturated mobile phone market.
“Yahoo gives us scale, that is what is most critical here,” Marni Walden, who is head of product innovation and new business at Verizon told CNBC, adding that the company’s audience will go from the millions to the billions. “We want to compete and that is the place we need to be.”
Why the AOL-Yahoo combo makes sense — because advertisers and consumers need a third platform (by
MylesUdland</a>) <a href="https://t.co/NNMUYbjYGS">https://t.co/NNMUYbjYGS</a></p>— Henry Blodget (hblodget) July 25, 2016
In a Tumblr blog post, Yahoo Chief Executive Officer Marissa Mayer said she planned to stay at Yahoo, but on a conference call with investors made it clear that would only be through to the deal’s close.
Walden, who will head the combined company, said the new leadership team has yet to be determined.
Mayer has been CEO since July 2012, but failed to turn the company around.