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| Yahoo to sell core web business to Verizon for nearly $5bn | Yahoo to sell core web business to Verizon for nearly $5bn |
| (about 1 hour later) | |
| Verizon confirmed it has agreed to buy Yahoo’s core internet business for $4.83bn (£3.62bn) in cash on Monday, ending the latest chapter in the struggling fortunes of the fading web pioneer. | |
| Verizon, the US’s largest telecommunications company by subscribers, will combine Yahoo with another fallen internet giant, AOL, which it bought last year for $4.4bn. | |
| Related: By the numbers: why big-name businesses are bidding for Yahoo | Related: By the numbers: why big-name businesses are bidding for Yahoo |
| The deal, expected to be complete in 2017, marks the end of Yahoo as an operating company, leaving it with a 15% stake in Chinese e-commerce company Alibaba and a 35.5% interest in Yahoo Japan. | The deal, expected to be complete in 2017, marks the end of Yahoo as an operating company, leaving it with a 15% stake in Chinese e-commerce company Alibaba and a 35.5% interest in Yahoo Japan. |
| “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,” Yahoo’s chief executive, Marissa Mayer, said in a statement on Monday. | “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,” Yahoo’s chief executive, Marissa Mayer, said in a statement on Monday. |
| Founded in a Stanford University dorm room in 1994 by Jerry Yang and David Filo as “Jerry and David’s Guide To The World Wide Web,” Yahoo grew rapidly through the 1990s to become one of the pre-eminent internet companies of its generation. | |
| Offering email, news, shopping and search, Yahoo went public in 1996, with its share price soaring 154% on day one. In January 2000, Yahoo was valued at $125bn. But the company failed to keep pace with the changing tech landscape as Google came to dominate search and the Facebook social media. | |
| It still has over one billion active monthly users but Verizon’s price is less than a quarter of Snapchat’s current valuation. | |
| Yahoo will continue as an independent company until the deal receives shareholder and regulatory approval, the companies said. | Yahoo will continue as an independent company until the deal receives shareholder and regulatory approval, the companies said. |
| The sale is an ignominious end to Mayer’s plans to turn Yahoo around. Mayer, a highly rated Google executive, joined Yahoo in July 2012. Before her arrival the company was in disarray and had had four CEOs in three years. | |
| Mayer promised a “renewed focus on product innovation to drive user experience and advertising revenue”. But shareholders lost faith in her after a wild spending spree in which she tried to build Yahoo’s content business by adding blog-site Tumblr, for $1.1bn, and signed deals with TV news anchor Katie Couric and the National Football League that failed to pay off. | |
| In a Tumblr blogpost, Mayer said she planned to stay at Yahoo, but Verizon’s Marni Walden, who will head the combined company, told CNBC the new leadership team has yet to be determined. | |
| Should Mayer be forced out, she is in for a payoff of $137m. Yahoo’s boss has already taken home $78m since she was installed as CEO, according to stock analytics firm MSCI. Based on the terms of the company’s most recent proxy statement, she will take home another $59m if she’s dismissed from the company after a buyout. | |
| The sale does not include Yahoo’s cash, its shares in Alibaba, its shares in Yahoo Japan, Yahoo’s convertible notes, certain minority investments and Yahoo’s non-core patents. | The sale does not include Yahoo’s cash, its shares in Alibaba, its shares in Yahoo Japan, Yahoo’s convertible notes, certain minority investments and Yahoo’s non-core patents. |
| The Alibaba and Yahoo Japan investments are worth about $40bn, while Yahoo had a market value of about $37.4bn as of Friday’s close. | The Alibaba and Yahoo Japan investments are worth about $40bn, while Yahoo had a market value of about $37.4bn as of Friday’s close. |
| Verizon prevailed over rival bidders for Yahoo, including AT&T; a group led by Quicken Loans founder Dan Gilbert and backed by billionaire Warren Buffett; private equity firm TPG Capital; and a consortium of buyout firms Vector Capital and Sycamore Partners. | Verizon prevailed over rival bidders for Yahoo, including AT&T; a group led by Quicken Loans founder Dan Gilbert and backed by billionaire Warren Buffett; private equity firm TPG Capital; and a consortium of buyout firms Vector Capital and Sycamore Partners. |
| Under pressure from activist investor Starboard Value, Yahoo launched an auction of its core business in February after shelving plans to spin off its stake in Alibaba. | Under pressure from activist investor Starboard Value, Yahoo launched an auction of its core business in February after shelving plans to spin off its stake in Alibaba. |
| Reuters contributed to this article. |