Verizon announced on Monday morning it will buy Yahoo for $4.83 billion in cash. It is the end of a closely scrutinized, six-month sale process.
Yahoo first put itself up for sale in February and it fielded multiple bids from many different types of buyers — supposedly as many as 40
at one point. Those included AT&T; Quicken Loans founder Dan
Gilbert with financial backing from Berkshire Hathaway CEO Warren
Buffett; and private equity firms TPG and Vector Capital Management.
According to Re/code, Yahoo informed the other bidders on Saturday that Verizon had won the process.
“Yahoo
is a company that has changed the world, and will continue to do so
through this combination with Verizon and AOL,” said Yahoo CEO Marissa
Mayer in a press release. “The sale of our operating business, which
effectively separates our Asian asset equity stakes, is an important
step in our plan to unlock shareholder value for Yahoo. 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.”
Tim
Armstrong, CEO of AOL when Verizon acquired it for $4.4 billion last
year, will run a new group at Verizon that brings together AOL and
Yahoo, he confirmed on Bloomberg TV on Monday. “Our mission at AOL is to
build brands people love, and we will continue to invest in and grow
them,” he said in a press release. “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 … We have enormous
respect for what Yahoo has accomplished.”
Marissa Mayer was generally not expected to stay on board, but said in a Yahoo blog post
on Monday that in fact she will. “For me personally, I’m planning to
stay,” she wrote. “I love Yahoo… It’s important to me to see Yahoo into
its next chapter.” She did not specify what role she would serve.
Verizon’s
acquisition is of “core” Yahoo, which includes search, email,
advertising products and the media business (including Yahoo Finance).
It did not acquire Yahoo’s 15% stake in Alibaba, its 35% stake in Yahoo
Japan, or Yahoo’s patents, which some analysts suggested during the
bidding process were valuable.
As
Suntrust wrote in a note this month, “Yahoo is running two auctions in
parallel – core sale and Excalibur patent portfolio – so we wouldn’t be
surprised to see multiple winners.” If there is a winner of Yahoo’s
patents, it remains to be seen who that is and how much they will pay.
Suntrust predicted the Yahoo sale would generate $6 billion, “in one or
multiple transactions.”
Verizon
has made a string of acquisitions in an apparent effort to move beyond a
telecom provider into a media-and-mobile-advertising powerhouse that
can compete with Google. Many believe buying Yahoo is a savvy move for Verizon.
In addition to getting the fifth-most visited web site in the US,
Verizon gets assets like Tumblr, Flickr, Polyvore and digital ad tools
Flurry and BrightRoll.
Last week, Yahoo reported second-quarter earnings of 9 cents per share
and revenue of $1.31 billion, which beat analyst expectations. Revenue
of its MaVeNS division (mobile, video, native and social), which
accounts for more than 30% of Yahoo’s revenue, rose 25% last quarter. Yahoo shares are up 32% in the last six months during the public sale process.
Verizon reports its own Q2 earnings on Tuesday, and reportedly wanted to announce the Yahoo deal before that.
RBC
Capital Markets, in a recent note, predicted the turnaround of Yahoo
post-sale would “take multiple years to show meaningful results.”
Disclaimer:
Yahoo is the corporate parent of Yahoo Finance, but Yahoo Finance
covers Yahoo as it does any other large public company.
http://finance.yahoo.com/news/verizon-buys-yahoo-5-billion-000000239.html
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