Verizon's $4.83 billion acquisition of Yahoo, announced today, will create "a new rival in mobile media technology," according to the company. The deal comes just over a year after Verizon's purchase of AOL for $4.4 billion.
By adding Yahoo to its fold, Verizon gains a digital media property with more than 1 billion monthly active users, along with significant new advertising opportunities. The acquisition is aimed at fueling new growth as the mobile services market continues to shift dramatically.
Expected to be finalized early next year, the all-cash deal will expand Verizon's portfolio of digital media brands with the addition of Yahoo's online news, finance and sports properties. Verizon will also gain Yahoo's email service, which boasts 225 million users, and several of the company's advertising technology assets, including Brightroll, Flurry and Gemini.
Opportunities for 'Transformation'
"Just over a year ago we acquired AOL to enhance our strategy of providing a cross-screen connection for consumers, creators and advertisers," Verizon chairman and CEO Lowell McAdam said in a statement. "The acquisition of Yahoo will put Verizon in a highly competitive position as a top global mobile media company, and help accelerate our revenue stream in digital advertising."
For Yahoo, meanwhile, the deal adds new distribution opportunities for its digital content and promises to boost the value of its properties for shareholders. It will also help to separate out Yahoo's Asian assets, including shares in Alibaba Group Holdings and Yahoo Japan that are not included in the transaction.
The deal "presents exciting opportunities to accelerate Yahoo's transformation," Yahoo CEO Marissa Mayer wrote in an email to employees posted on the company's Tumblr blog. "Among the many entities that showed interest in Yahoo, Verizon believed most in the immense value we’ve created, and in what a combination could bring our users, our advertisers, and our partners."
An End to Yahoo's 'Mess'
Verizon's purchase of Yahoo will also build on its 2015 acquisition of AOL, which added such digital properties as The Huffington Post, TechCrunch and Engadget as well as AOL.com.
The transaction "is about unleashing Yahoo's full potential, building upon our collective synergies, and strengthening and accelerating that growth," AOL CEO Tim Armstrong said in Verizon's statement. "Combining Verizon, AOL and Yahoo will create a new powerful competitive rival in mobile media, and an open, scaled alternative offering for advertisers and publishers."
Others, however, put a different spin on the transaction. Noting Yahoo's one-time valuation of $125 billion, Forbes today called the acquisition the "saddest $5 billion deal in tech history." For Yahoo, it marks "the end of the long process to extricate itself from a mess of its own making," according to Forbes. Vox, meanwhile, said the deal "represents a stunning decline" for Yahoo, noting that the company's other properties have been outshone by its holdings in Alibaba, which last year accounted for a large part of Yahoo's value.
Until the deal is finalized, Yahoo will continue to operate as an independent company. In her message to employees, Mayer added that she plans to stay with the organization for now. "It's important to me to see Yahoo into its next chapter," she said.