Verizon Communications (NYSE:VZ) announced that it signed a definitive agreement to acquire the operating business of Yahoo! Inc. (NASDAQ:YHOO) for approximately $4.83 billion in cash.
The transaction is subject to the approval of Yahoo shareholders, regulatory approvals, and customary closing conditions. The companies expected to close the deal in the first quarter of 2017.
Yahoo will continue to operate independently, offering and improving its own products and services for users, advertisers, developers and partners after the deal.
Yahoo will boost Verizon’s competitiveness
Verizon will integrate Yahoo with AOL, which the telecommunications company acquired over a year ago to boost its strategy of providing a cross-screen connection for consumers, creators, advertisers, according to its Chairman and CEO Lowell McAdam in a statement.
McAdam believes that the acquisition will boost Verizon’s competitiveness as a “top global mobile media company” and it will also help accelerate its revenue stream in digital advertising.
Yahoo’s internet services have more than 1 billion monthly active users including 600 million active mobile users.
Important step to unlock Yahoo’s shareholder value
On the other hand, Yahoo CEO Marissa Mayer said Yahoo will continue to change the world through its merger with Verizon and AOL. According to her, selling the company’s operating business is an important step in their plan to unlock value for shareholders.
“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,” she added.
Yahoo will be left with its stakes in Alibaba Group Holding (NYSE:BABA) and Yahoo Japan Corporation (TYO: 4869), with a combined market value of around $40 billion.
Meanwhile, AOL CEO Tim Armstrong commented, “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.”
The combination of Yahoo, Verizon, and AOL will create one of the largest portfolios of owned and partnered global brands with extensive distribution capabilities.