Verizon Communications Inc. (NYSE: VZ) announced on Monday that it plans to takeover Yahoo! Inc. (NASDAQ: YHOO)’s internet business for $4.8 billion in cash, seeking to bolster its meager digital content for customers.
The takeover price, which include Yahoo’s core web assets and several real estates, is a remarkable down for Yahoo which once had a market value over $125 billion during the height of the dot-com boom.
“The acquisition of Yahoo will put Verizon in a highly competitive position as a top global mobile media company and help accelerate our revenue stream in digital advertising,” Lowell C. McAdam, Verizon’s chairman and chief executive, said in a statement.
This takeover deal doesn’t include Yahoo’s cash, its shares in Yahoo Japan Corporation (TYO: 4689), its shares in Alibaba Group Holding Ltd (NYSE: BABA), and Yahoo’s noncore patents which named the Excalibur portfolio. Yahoo will keep these assets, change its name at closing, and become a publicly traded investment company.
The internet giant will be integrated with AOL under Marni Walden, EVP and President of the Product Innovation and New Businesses organization at Verizon.
Marissa Mayer, CEO of Yahoo, said: “Yahoo is a company that has changed the world, and will continue to do so through this combination with Verizon and AOL. 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.”
It was unclear that whether Marissa Mayer would work at Verizon after the deal closes in early 2017. If she is terminated, she is due a severance package of approxiamtely $57 million.
The sale of Yahoo’s business ends the company’s 22-year operation as an independent entity. Founded in a trailer in 1994 by two Stanford graduate students, it was the front door to the web for a generation of internet users but failed to keep up with Google in search technology and then missed the social media and mobile revolutions.
Shares of Yahoo down 2.18% to $38.52 during Monday morning trading, while Verizon decreased 0.52% to $55.81.