Yahoo dodges disaster on Verizon deal — but still loses $350 million
Verizon is still going to buy Yahoo despite the revelation of massive security breaches within the company.
Yahoo isn't getting off scot-free. The new deal will be $350 million lighter than the original, according to a press release issued on Tuesday by Yahoo. In other words, Verizon was able to knock off 7 percent from the original deal price.
Investors had clearly been braced for a bigger hit to Yahoo. News that the deal would still go through began to emerge last week, when Bloomberg reported that Verizon had renegotiated $250 million off the deal price.
That sent shares in Yahoo sharply higher.
Jan Dawson, analyst at Jackdaw Research, noted that the new deal shows that there's little expectation of the data breaches having much of an impact on the company in the future.
"The $350 million discount is not actually all that significant, which likely reflects the fact that security breaches like this don’t end up having all that much long-term impact on customer satisfaction or usage," he wrote on Tech Narratives.
Verizon agreed to acquire Yahoo's core business in July 2016 for $4.83 billion, a move that marked the end of Yahoo's long run as one of the premiere independent internet companies.
"We continue to be very excited to join forces with Verizon and AOL. This transaction will accelerate Yahoo's operating business especially on mobile, while effectively separating our Asian asset equity stakes," Yahoo CEO Marissa Mayer said in a press release. "It is an important step to unlock shareholder value for Yahoo, and we can now move forward with confidence and certainty. We have a terrific, loyal, experienced team at Yahoo. I'm incredibly proud of our team's strong product and financial execution in 2016, setting the stage for a successful integration."
Not long after, news emerged that Yahoo had been the subject of two separate, massive security breaches that included the theft of account information for 1 billion users.
The revelation led to Verizon openly stating that it was looking into whether the revelation of the breaches — which Verizon apparently did not know about at the time of the deal — would affect the value of Yahoo.
Dawson added that he remains skeptical that Verizon will have much success in integrating Yahoo alongside its other digital properties (AOL, namely) in an effort to compete for online advertising.
"Ironically, now the big question once again becomes whether Verizon can actually craft something compelling out of these various bits of yesteryear’s Internet. Verizon is said to be aiming to go head to head with Google and Facebook, which is a real stretch when it comes to well-targeted advertising, and I’m still very skeptical that these assets combined can ever be more than a second tier player in the online advertising market," Dawson wrote.
Jason Abbruzzese is a Business Reporter at Mashable. He covers the media and telecom industries with a particular focus on how the Internet is changing these markets and impacting consumers. Prior to working at Mashable, Jason served as Markets Reporter and Web Producer at the Financial Times. Jason holds a B.S. in Journalism from Boston University and an M.A. in International Affairs from Australian National University.
