The bidding process for Yahoo’s core business has been going on for a good few months now. Finally, the company announced today that the board has approved the sale of its core business to Verizon for $4.83 billion. The core business includes Yahoo’s search, mobile, advertising technology, content such as Yahoo Sports, Yahoo Finance and Tumblr, and real estate.
Two decades ago, Yahoo’s business was valued at over 100 billion dollars. The limelight was taken away ever since the internet was all about social media and advertising on mobile and other devices. About a decade ago, Yahoo had invested $1 billion in Alibaba; the investment resulted in the largest majority of the company’s value by the end of 2015. The reason for the transfer of company’s core business was surprisingly not because of the declining performance of its internet properties – Yahoo was not in a position to sell its shares to its worrying shareholders, because the move would generate a huge tax amount, and hence instead of selling the shares, Yahoo’s CEO, Mayer, was forced to sell the business.
Verizon acquiring Yahoo doesn’t quite come across as a surprise. About a year ago, Verizon had acquired AOL, another struggling company, whose revenue also depends on internet content and selling ads. Through both the acquisitions, Verizon is aiming to reach a competitive position as a global mobile media company and accelerate its revenue stream in digital advertising.
“Our mission at AOL is to build brands people love, and we will continue to invest in and grow them. 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,” Tim Armstrong, CEO of AOL, said in the release. “We have enormous respect for what Yahoo has accomplished: this transaction is about unleashing Yahoo’s full potential, building upon our collective synergies, and strengthening and accelerating that growth. 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.”
With Yahoo and AOL in its control, Verizon is now hoping to expand beyond its telecommunications business and integrate the ad sales teams of the companies and offer advertisement packages that include media brands from both the companies. Core business apart, Yahoo is now left with a 15 percent stake in Alibaba, worth $32 billion and a 36 percent stake in Yahoo Japan, worth $8 billion.
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