Verizon buys Yahoo for $4.8 billion

Verizon announced on Monday morning it will buy Yahoo for $4.83 billion in cash. It is the end of a closely-scrutinized, six-month sale process. Yahoo first put itself up for sale in February and it fielded multiple bids from many different types of buyers—supposedly as many as 40 at one point. Those included AT&T; Quicken Loans founder Dan Gilbert with financial backing from Berkshire Hathaway CEO Warren Buffett; and private equity firms TPG and Vector Capital Management. According to Re/code, Yahoo informed the other bidders on Saturday that Verizon had won the process.
“Yahoo is a company that has changed the world, and will continue to do so through this combination with Verizon and AOL,” said Yahoo CEO Marissa Mayer in a press release. “The sale of our operating business, which effectively separates our Asian asset equity stakes, is an important step in our plan to unlock shareholder value for Yahoo. This transaction also sets up a great opportunity for Yahoo to build further distribution and accelerate our work in mobile, video, native advertising and social.”
Tim Armstrong, CEO of AOL when Verizon acquired it for $4.4 billion last year, will run a new group at Verizon that brings together AOL and Yahoo, he confirmed on Bloomberg TV on Monday. “Our mission at AOL is to build brands people love, and we will continue to invest in and grow them,” he said in a press release. “Yahoo has been a long-time investor in premium content and created some of the most beloved consumer brands in key categories like sports, news and finance… We have enormous respect for what Yahoo has accomplished.”
Verizon’s acquisition is of “core” Yahoo, which includes search, email, advertising products, and the media business (including Yahoo Finance). It did not appear to purchase Yahoo’s patents, which some analysts suggested during the bidding process were valuable. As Suntrust wrote in a note this month, “Yahoo is running two auctions in parallel – core sale and Excalibur patent portfolio – so we wouldn’t be surprised to see multiple winners.” If there is a winner of Yahoo’s patents, it remains to be seen who that is and how much they will pay. Suntrust predicted the Yahoo sale would generate $6 billion, “in one or multiple transactions.”
Verizon has made a string of acquisitions in an apparent effort to move beyond a telecom provider into a media-and-mobile-advertising powerhouse that can compete with Google. Many believe buying Yahoo is a savvy move for Verizon. In addition to getting the fifth-most visited web site in the US, Verizon gets assets like Tumblr, Flickr, Polyvore and digital ad tools Flurry and BrightRoll.