After months of speculation, Verizon emerged as the winner for Yahoo's web assets by closing on a cash deal worth $4.83 billion.
While the news put a stake into Yahoo's slow demise as a former Internet and web portal juggernaut, Verizon Communications Inc. (NYSE: VZ) will fold Yahoo's 1 billion monthly users into its AOL division. With the deal, Verizon becomes a major player in the digital-advertising marketplace behind Google and Facebook .
Additional advertising assets that Verizon will pick up include Brightroll, which is a programmatic demand-side platform; Flurry, an independent mobile apps analytics service; and Gemini, a search advertising service.
"We have enormous respect for what Yahoo has accomplished: this transaction is about unleashing Yahoo's full potential, building upon our collective synergies, and strengthening and accelerating that growth," said Tim Armstrong, CEO of AOL, in a prepared statement. "Combining Verizon, AOL and Yahoo will create a new powerful competitive rival in mobile media, and an open, scaled alternative offering for advertisers and publishers."
is expected to close in the first quarter of next year. Until the closing is finished, Yahoo Inc. (Nasdaq: YHOO) will continue to operate independently.
While Yahoo's 21-year reign as an independent business is coming to a close, it will retain stakes in Alibaba Group and Yahoo Japan, which have a combined market value of about $40 billion.
Earlier this year, Yahoo CEO Marissa Mayer threw in the towel on the company's core Internet assets due to increased pressure from investors and dwindling sales. (See Bloomberg: AT&T Is Kicking the Tires on Yahoo's Internet Business.)
Faced with competition from the likes of Google (Nasdaq: GOOG), Yahoo became a lumbering dinosaur in the technology world as the Internet shifted towards social networking, mobile and messaging.
While Verizon can bank on experience from its deal to buy AOL Inc. (NYSE: AOL)
over a year ago, it does face significant integration issues on the technology front as well as cultural challenges with blending AOL and Yahoo.
— Mike Robuck, Editor, Telco Transformation