Verizon to buy Yahoo's core business for $4.8 billion in digital ad push

Mon Jul 25, 2016 9:09pm EDT
 
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By Malathi Nayak and Deborah M. Todd

NEW YORK/SAN FRANCISCO (Reuters) - Verizon Communications Inc said on Monday it would buy Yahoo Inc's core internet properties for $4.83 billion in cash, marking the end of the line for a storied Web pioneer and setting the stage for a big new internet push by the telecom giant.

Verizon (VZ.N: Quote) will combine Yahoo's YHOO.O search, email and messenger assets as well as advertising technology tools with its AOL unit, which it bought last year for $4.4 billion. Verizon has been looking to mobile video and advertising for new sources of revenue outside the oversaturated wireless market.

The No. 1 U.S. wireless operator is betting that it can take data on more than 200 million unique monthly visitors to Yahoo sites, many of them on mobile devices, and combine it with data on 150 million or so unique monthly AOL users and data on its own user base of over 100 million wireless subscribers to offer a more targeted service for advertisers.

Barclays said last month Verizon could save $500 million a year in costs of acquiring internet traffic and other expenses by buying Yahoo's internet business.

The deal likely means more investment in popular content sites such as AOL’s Huffington Post and Yahoo Finance when they become part of a much larger entity.

“It now becomes somewhat easier to justify investing in content,” said Brian Wieser, an analyst at Pivotal Research.

Verizon said it would provide more detail on the strategy behind the acquisition when it announces second-quarter earnings on Tuesday.

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A combination photo shows Yahoo logo in Rolle, Switzerland (top) in 2012 and a Verizon sign at a retail store in San Diego, California, U.S. In 2016. REUTERS/File Photos