Yahoo inks $4.8bn deal with Verizon for core business

Yahoo will be bought by American telecom giant Verizon Communications for nearly USD 5 billion (about Rs 32,358 crore) in cash, ending a two-decade run as an independent company for the Internet pioneer.

Yahoo will be combined with AOL, another faded Internet star that Verizon bought last year. Verizon chief executive Lowell McAdam said this will create "a top global mobile media company, and help accelerate our revenue stream in digital advertising."

The acquisition, expected to close in early 2017, pending shareholder and regulatory approval will exclude Yahoo's cash, certain patent holdings, as well as its share in China's Alibaba Group and stake in Yahoo Japan.

Yahoo, which was the entry door to the Internet for an early generation of web users, has been coping with years of decline and struggled to keep up with rivals like Google and Facebook.

Yahoo chief Marissa Mayer said the company, that changed the world, will continue to do so through this combination with Verizon and AOL.

On a conference call, she said the agreement is "an exceptional outcome for Yahoo shareholders" and that Verizon was chosen because it "believed in us the most".

In a mail to employees, she said she would be open to staying on with the company, even though no decision has been made on her future following the acquisition by Verizon.

"I'm planning to stay... It's important to me to see Yahoo into its next chapter," she wrote.

Yahoo will operate independently until the acquisition and then fall under the aegis of AOL unit chief, Tim Armstrong, a former Google colleague of Mayer.

"Yahoo has been a long-time investor in premium content and created some of the most beloved consumer brands in key categories like sports, news and finance," Armstrong said in the statement.

According to documents filed with regulators, Mayer would get a severance package of USD 55 million if removed within a year of a change of control.

Mayer was brought on board in 2012 from Google seeking to revitalise the Silicon Valley icon, which at its peak had a market value of over USD 100 billion. 

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Founded in 1994 by two Stanford University students, Jerry Yang and David Filo, Yahoo went public in 1996 in one of the most hotly anticipated stock offerings of that time.

While many tech companies like web browser maker Netscape, never made it to the end of the first dot-com boom, Yahoo managed to grow from being a directory of websites to offering searches, email, shopping and news.

Yahoo has a global user base of over one billion monthly active users, including 600 million monthly active mobile users, through search, communications and digital content products.

Verizon will generally issue cash-settled Verizon RSUs for Yahoo RSUs that are outstanding at the close.

Yahoo, which employed over 11,000 people, has been cutting staff significantly. As of March 31, its employee count was estimated at about 9,400.

As part of its attempts to boost business, Yahoo bought online blogging platform, Tumblr for USD 1 billion in 2013.

Yahoo posted a loss of USD 4.4 billion for 2015, and in its most recent quarter lost another USD 440 million and had to write down the value of much of its assets.
Revenues for 2015 were USD 4.9 billion.