Yahoo and Verizon have finally confirmed the new deal, regarding the former’s sale to the latter. Following two massive data breaches that saw the company lose details of over 1 Billion accounts, Verizon has knocked $350 million off the originally planned price, and will now be paying a $4.48 billion sum to acquire Yahoo.
Apart from a price tag that is lighter by something like $350 million, the only other major change is the fact that going into the future, all legal and regulatory liabilities will be jointly borne by both Yahoo and Verizon. Further Yahoo liabilities meanwhile, will be assumed by Altaba — which is the holding company formed with Yahoo’s Alibaba stake as its main asset.
If you remember, Yahoo and Verizon had agreed upon a price nearer to $5 Billion, last year. However, following disclosures of two massive data breaches at the Yahoo, that cumulatively saw over 1.5 billion users affected, the deal looked to be in serious danger at one point in time. Indeed, Verizon looked to be considering letting the deal go but apparently, it has decided to go ahead with deal with a price cut.
Speaking on the topic, Marni Walden, Verizon’s executive vice president and president of new business, said:
We have always believed this acquisition makes strategic sense. We look forward to moving ahead expeditiously so that we can quickly welcome Yahoo’s tremendous talent and assets into our expanding portfolio in the digital advertising space. The amended terms of the agreement provide a fair and favorable outcome for shareholders. It provides protections for both sides and delivers a clear path to close the transaction in the second quarter.
Speaking on the topic, Marissa Mayer, Yahoo’s CEO said:
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. 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.
Meanwhile, Yahoo will be responsible for 50 percent of any cash liability that is incurred following the closing related to non-SEC (Securities and Exchange Commission) government investigations and third-party litigation related to the breaches.
What’s more, liabilities arising from shareholder lawsuits and SEC investigations will continue to be the responsibility of Yahoo. However, there is a slight confusion here. Since Verizon is acquiring Yahoo, won’t it be Verizon who would end up having to pay for any such liabilities? Meanwhile, TechCrunch has confirmed that it will be Altaba, that will be paying for any other liabilities that may arise following the acquisition.
The key takeaway here, is that all the regulatory problems, all the bad publicity, all the liabilities apart, Verizon still sees enough value in Yahoo to keep going forward with the acquisition.