Verizon – America’s biggest mobile operator – on Monday announced a $4.83 billion cash deal to buy Yahoo’s core internet properties, which includes its search engine, email service and sections devoted to news, sports and finance. Yahoo is Verizon’s second big acquisition following AOL’s buyout for $4.4 billion last year. The deal puts an end to the five-month auction that was supposed to decide Yahoo’s future.
Here are five things to know about the Yahoo-Verizon deal:
1) Why Verizon is buying Yahoo? Verizon, which has access to 150 million unique monthly AOL users, will gain an additional 200 million unique visitors that come to Yahoo’s sites every month. The buyout will help Verizon emerge as a formidable rival to Google and Facebook, who dominated the US digital-ad market with a 55 per cent share last year. The Yahoo brand will be transferred to Verizon as part of the deal, which is expected to close in early 2017. 2) Why Yahoo put its internet business on the block? Yahoo’s revenue peaked in 2008, after which the company failed to keep up with Google and Facebook in the battle for online advertisers despite running some of the world’s most-read websites. The failure of Yahoo’s management to turnaround the internet business led activist investors to push for an outright sale of the company. Meanwhile, misplaced bets, such as Yahoo’s decision to buy social-blogging service Tumblr for $1.1 billion in 2013, also weighed on the company. Yahoo had to write down its investment in Tumblr as its value plunged by almost two-thirds over the last three years.
3) Yahoo missed many opportunities: Yahoo, founded in 1994 by Jerry Yang and David Filo, was a pioneer of online search and was valued at $125 billion at its 2000 peak. Yahoo’s email service continues to be the second most-popular in the US behind Google’s Gmail. But despite an early start, Yahoo failed to create a niche in either the media industry or the technology world, unlike internet search leader Google or social networking giant Facebook. Many analysts have blamed Yahoo for missing a string of opportunities that could have transformed the company. Yahoo had the opportunity to buy Google for $5 billion in 2002. Then there was a failed bid to buy Facebook for $1 billion in 2006. Yahoo later lost YouTube and Skype to rivals. In 2008, Yahoo’s board rejected a $45 billion takeover bid from Microsoft.