On Tuesday, Verizon announced an amendment to the terms of the agreement to purchase Yahoo’s operating business. The deal is still standing, but now for $350 million less for a total of $4.48 billion and expected to close sometime in Q2 2017.
The agreement also contemplates new financial responsibilities shared between the two companies. Yahoo is still in the spotlight for the biggest data breaches in history, both disclosed last year and affecting over 1 billion customers.
Verizon is not backing down from its intent to buy out the former industry giant, though. The telecom firm believes there is value in Yahoo’s assets and that a merger of the two entities will benefit both of them immensely in the market.
What does this mean for Yahoo and Verizon?
The new terms entail not only an evident profit loss for Yahoo but also a surge of new ties for both parties.
Previously valued at $4.83 billion, rumors suggest Verizon cut $250 million from the final price tag, but it ended up being $350 million, bringing down the deal’s worth to $4.48 billion.
Verizon will also have to step up and share damage costs from the massive hacks unveiled last year. Hackers compromised approximately 1.5 billion accounts between 2013 and 2014, but Yahoo only said so in 2016.
The company remains the sole responsible for payments to shareholders and the Security and Exchange Commission. Yahoo will have to pay out of pocket if the government agency finds any dirt or if investors file lawsuits against them.
SEC has an open investigation on the former industry leader, and it is inquiring about their past activities under CEO Marissa Mayer. The executive may have pressured engineers to stop them from disclosing sensitive information about the hacks.
How will both companies benefit from the deal?
“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,” said Verizon’s VP of Product Innovation and New Businesses, Marni Walden.
Yahoo, on the other hand, expressed their excitement over the deal because it represents a chance to substantially increase the reach of its platform, particularly in the mobile business environment.
Combined, both companies have an audience of over 1 billion consumers. Verizon believes in exploiting AOL to propel an online advertisement model that rivals Google’s proprietary solutions.
The ambitious yet achievable goal will depend on the telecom giant’s strategy to reestablish trust for the company among consumers. After that, it will have to push it up to its former glory if it ever wants to be competitive against major players.
Source: Verizon