Verizon to buy Yahoo’s core business for just $4.8 billion

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Telecommunications firm Verizon has confirmed it is buying Yahoo’s core internet properties.

It will pay just $4.83 billion (4.4 billion euros) in cash. In 2008 Microsoft offered $44.6bn for Yahoo, in a hostile takeover that Yahoo rejected.

The deal brings to an end a lengthy sale process by Yahoo, an internet pioneer but recently a mere shadow of its former self though it still has one billion monthly users for its mail and news and sports content.

“It’s a decade of mismanagement that has finally ended for Yahoo,” said Recon Analytics analyst Roger Entner. “It’s the continuation of an extension of Verizon’s strategy toward becoming a wireless internet player and a move away from (telecom) regulation for Verizon into an unregulated growth industry.”

Not included in the deal are the 15 percent stake in Chinese e-commerce giant Alibaba and its 35 percent interest in Yahoo Japan.

Critical scale

The purchase is to expand Verizon’s digital advertising and media business.

Verizon, the No. 1 US wireless operator, has in recent years looked to mobile video and advertising for new sources of revenue in an oversaturated mobile phone market. It has also scaled back on its FiOS TV and internet service.

“Yahoo gives us scale, that is what is most critical here,” Marni Walden, who is head of product innovation and new business at Verizon told CNBC, adding that the company’s audience will go from the millions to the billions. “We want to compete and that is the place we need to be.”

In a Tumblr blog post, Yahoo Chief Executive Officer Marissa Mayer said she planned to stay at Yahoo, but Walden, who will head the combined company, told CNBC the new leadership team has yet to be determined.

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