Marissa Mayer, Chief Executive of Yahoo Inc. Pic: Wikimedia Commons

Verizon has acquired Yahoo’s core internet business for $4.8bn

TELECOM giant Verizon will be buying Yahoo Inc.’s core internet properties for US$4.8 billion in cash, making Yahoo the second struggling internet mammoth Verizon has snapped up in its quest to expand beyond wireless and broadband.

Last year, Verizon bought Yahoo’s long-time rival AOL for US$4.4 billion. The deal will put Verizon in third place in the U.S. digital ad market share, behind Facebook and Google.

Verizon is now expected to combine Yahoo!’s search, email and messenger assets with AOL’s advertising technology tools, which analysts say will give the top wireless operator in the U.S. a significant foothold in the digital advertising market.

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The main goal here is to combine data collected from Yahoo’s 200 million-plus unique monthly visitors with AOL’s 150 million visitors on Verizon’s own user base, which includes aver 100 million wireless subscribers, to give advertisers more targeted services, reports Reuters.

In a note to employees on Monday, Yahoo Chief Executive Marissa Mayer said: “Today’s announcement not only brings us an important step toward separating Yahoo’s operating business from our Asian equity stakes, it also presents exciting opportunities to accelerate Yahoo’s transformation.”

She added that the sale is an important step in Yahoo’s plan to “unlock shareholder value” and it will allow the company to “build further distribution and accelerate our work in mobile, video, native advertising, and social”.

“With [Verizon’s] aggressive aims to grow global audience to 2 billion users and US$20 billion in revenue within the mobile-media business by 2020, Yahoo’s products and brand will be central to achieving these goals,” wrote Mayer. “Joining forces with AOL and Verizon will help us achieve tremendous scale on mobile.”

The acquisition will see Verizon taking over Yahoo’s email services, news websites, advertising tools, real estate, and certain patents. It is expected to close in 2017’s first quarter.

In June, Barclays said Verizon could save up to US$500 million a year in costs by buying Yahoo’s Internet business, as it would no longer have to shell out for traffic and other expenses.

Yahoo will still hold on to its stakes in China’s Alibaba and Yahoo Japan, reports Business Insider – both stakes have a total combined value of US$40 billion.

Yahoo was founded as a web directory in 1994 by Jerry Yang and David Filo. Where once it dominated the cybersphere, it has since been compared to a fallen star, as it struggled to keep up with rivals such as Google and Facebook.