Verizon to buy Yahoo at reduced price
The deal, announced Tuesday morning, addresses Yahoo’s recent disclosures of two massive data breaches — one affecting at least 500 million accounts in 2014 and another impacting more than 1 billion accounts in 2013.
Under the terms, Yahoo will pay for any expenses related to investigations from the U.S. Securities and Exchange Commission and shareholder lawsuits.
Yahoo and Verizon said they will split paying for cash liabilities related to non-SEC government investigations and other third-party litigation related to the data breaches.
“The amended terms of the agreement provide a fair and favorable outcome for shareholders,” Marni Walden, a Verizon executive vice president, said in a statement released Tuesday.
Yahoo will be renamed Altaba after the deal closes and will oversee the company’s investments in publicly traded companies Alibaba, a Chinese e-commerce firm and Yahoo Japan.
The revised deal provides some closure for Yahoo, which has struggled to compete against digital advertising giants like Google and Facebook, as consumers shift from using computers to smartphones to access the Internet.
Yahoo had planned to spin out its Alibaba shares and Yahoo’s small business unit into its own separate company tax-free in 2016, but decided against it after shareholders expressed concerns that the spin-off would be taxed after all.
Verizon aims to increase its share of digital advertising revenue, and with Yahoo’s more than 1 billion monthly active users, it would increase the number of people seeing Verizon content.
Laura Martin, a senior analyst with investment banking and asset management firm Needham & Co. said that the new terms were a fair outcome.