Verizon Shaves $350M Off of Yahoo Deal

Verizon Communications announced Tuesday morning that it has given a $350 million haircut to its original offer to buy Yahoo's core Internet assets, which lowered the total price to $4.48 billion.

Verizon first announced its intentions to buy Yahoo in July of last year, but then lobbied for a lower price than its first offer of $4.83 billion after Yahoo disclosed two data breaches in 2016. (See Seen & Heard: Verizon Gets Cold Feet on Yahoo Deal and Verizon Betting Big on Yahoo's Assets.)

Under the amended terms announced Tuesday, Yahoo and Verizon will share certain legal and regulatory liabilities arising from Yahoo's hacks. Verizon and Yahoo expect the deal to close in the second quarter of this year.

The new terms also state that Yahoo and Verizon will split cash liabilities related to non-Securities and Exchange Commission (SEC) government investigations and third-party litigation related to the breaches while liabilities arising from shareholder lawsuits and SEC investigations will still be the responsibility of Yahoo.

In December, Yahoo announced that it had uncovered a 2013 cyber attack that compromised the user data of more than 1 billion email accounts, which included more than 150,000 US government employees. Earlier in September, Yahoo said that more than 500 million email accounts had been hacked.

Both Verizon and AT&T are branching out of their traditional business models by acquiring other companies. AT&T bought DirecTV in 2015 and is working on closing its $85.4 billion acquisition of Time Warner to offer more content to its subscribers. (See AT&T-Time Warner's Chances Are 50-50 – MoffetNathanson.)

Yahoo would bring more than 1 billion users and targeted advertising technology into Verizon's fold. Verizon would combine the Yahoo assets, which also include search, messenger and email, with its AOL unit that it bought in 2015 for $4.4 billion. (See Verizon Closes AOL, Hints at Summer Launch.)

— Mike Robuck, Editor, Telco Transformation