The Verizon-Yahoo deal has been in the cards for a good while now and the companies have been negotiating the terms of the agreement.behind two massive Yahoo data breaches came to light last year, however, the deal was not that certain anymore as Verizon(verizon.com) was having second thoughts.
Verizon has announced that it will buy Yahoo`s core business behind all, but at a $350 million discount since the web company had two massive cyberattacks.
Verizon and Yahoo have now managed to reach an agreement and go through with the dealdespite the data breaches, albeit they did amend the terms and Yahoo now has a lower valuation.
Verizon-Yahoo Deal Price: Lower Valuation
More specifically,
VerizonTechnology company
knocked $350 million off its original offer, driving Yahoo`s valuation down to $4.48 billion.At the same time, the two companies agreed to share certain regulatory and legal liabilities stemming from the data breachesYahoo suffered.Marni Walden,
VerizonTechnology company
executive vice president and president of Product Innovation and New Businesses, highlights that Verizon has always thought acquiring Yahoo would create sense from a strategic point of view.With the amended terms now in place, Verizon wants to expedite the deal and add Yahoo`s assets and talents to its growing digital advertising portfolio."The amended terms of the agreement provide a fair and favorable outcome for shareholders," saysWalden."It provides protections for both sides and delivers a clear path to close the transaction in the second quarter."
Meanwhile, Yahoo
CEOChief Executive Officer
Marissa Mayer says Yahoo is also excited to team up with Verizon and AOL and boost its operating business, specifically on mobile.Mayer highlights that the transaction will mark a notable milestone toward "unlocking shareholder value for Yahoo."Verizon-Yahoo Deal: Amended Terms
Yahoo will assume half of any and all cash liabilities related to third-party litigation over the data breaches or non-SEC government investigations, if they are incurred after the deal closes.Other liabilities stemming from shareholder lawsuits or investigations conducted by the Securities and Exchange Commissionwill still be Yahoo`s responsibility.
The two companies also agreed that the data breaches or the damage they caused will not play a role in deciding over a "Business Material Adverse Effect" or whether certain conditions to close the deal have been met.Simply put, this means that Verizon will not be trying to reduce the price of the deal any further in view of the fact that of those data breaches.
That said, Verizon is on track to acquire Yahoo for $4.48 billion in cash and the transaction is expected to close in the second quarter of this year.The deal is still subject to some adjustments prior to closing, but most of the kinks have been ironed out.
With Yahoo under its belt, Verizon will expand its ambitious bid to build a larger internet-based business leveraging both Yahoo and AOL to sell advertising and other services over its growing network.The move is part of a wider bid to counter stagnation and declines in Verizon`s core business for basic smartphone services.
