After agreeing to pay $4.8 billion to acquire key Yahoo assets, Verizon Communications has now reduced its offering by $350 million, or more than 7% off the original price. The deal was originally confirmed in July 2016, and included Tumblr, Flickr, Yahoo Mail, Yahoo Finance and Sports, and other web properties.
The discount has been agreed upon by the two companies, and the final price is set at $4.48 billion. The two companies will share the legal costs and liabilities incurred because of the multiple data breaches that Yahoo experienced, starting over three years ago.
Even at the discounted price Yahoo still comes out a winner, but there’s a down side to this as well. The company will continue to be responsible for all liabilities that may arise from either the SEC’s ongoing investigations, or lawsuits by shareholders. It will also be responsible for half of all other liabilities related to the security breaches in question.
As reported earlier, what’s left of the company will retain some assets, including its 15% stake in Alibaba. After the sale of assets to Verizon, Remain Co. will become Altaba, which will also own a 35.5% stake in Yahoo Japan.
In short, the old Yahoo will become a $40 billion investment company called Altaba with primarily Oriental interests.
Verizon Will Still Buy Yahoo Despite Hacks and SEC Probe, Slated for Q2 2017
Yahoo’s failure to sustain itself is a big blow to the concept of maverick companies striking it big on their own and growing to dominate their chosen domains.
The company’s as tough as they come. Yahoo fought off the dot-com bubble burst of 2001; it fended off an acquisition bid from Microsoft in 2008; it fired 14% (2,000 people) of its workforce in 2012; it went through several CEOs before Marissa Mayer joined in 2012; and right through all that the company managed to pull itself out of trouble time after time.
But this time, things had gotten so out of hand that it came to a question of sink or sell out. And sell out they did, at a handsome price considering the state of the company.
The loss of a familiar name in technology is possibly the greatest “fallout” of this sale. We’ve lost a household name that many of us grew up with – before Google took over the world; before Amazon became the greatest retailer on the planet; before Facebook gave a name to the art of social media.
Verizon, the real beneficiary in this deal, now has a much stronger online presence than ever. We’re yet to see how they actually structure the newly acquired assets in the context of already owning several other large, media-related web properties.
Now that the price is settled on, all that remains is for the transaction to be completed. We’ll keep you up to date as things progress.
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