After more than two decades, Yahoo will cease to be an independent company, CNN Tech reports. Verizon has completed its acquisition of the company for almost $4.5 billion. As the deal get wrapped up, Yahoo’s CEO Marissa Mayer will step down with a golden parachute of $23 million.
Under her leadership, Yahoo acquired multiple start-ups hoping to be able to compete in the mobile area. But, these bets haven’t paid off as well as expected.
Yahoo and AOL, which is also a part of Verizon, will form a new digital media business called Oath. Verizon hopes that this will make it easier to compete for advertising dollars against such giants as Google and Facebook. There will also be reductions in the workforce. As many as 2,100 employees are likely to be laid off. This represents 15 percent of the workers. The rest of Yahoo will be named Altaba. Essentially, this will be a holding company for shares of Alibaba, a Chinese e-commerce giant.
The deal took a year to complete and was almost called off after more than a billion users were affected by massive security breaches. To complete the deal after these incidents, Yahoo agreed to decrease its acquisition price by $350 million, and also has consented to split potential liabilities resulting from these breaches.
Yahoo is one of the Internet pioneers. The company was among the first and most recognized directories, and later portals and search engines. During the speculative mania of late 1990s, Yahoo was valued more than $100 billion. But, later it couldn’t compete with the likes of Google and Facebook. Another Verizon’s purchase, AOL, is a fallen angel as well.
Currently, Yahoo has a market cap around $50 billion dollars. Its buyer, Verizon, is valued at $190 billion.
Yahoo, well known in the early years of the internet as a search engine and email platform, has been purchased by Verizon for 4.48 billion dollars. This deal, while substantial, is 350 million dollars less than originally announced. The decreased price is due in part to data breaches that affected more than 1 billion user accounts, as discussed further here:
While the acquisition means the end of Yahoo as an independent company, Verizon is combining the company with AOL assets (which it also purchased in 2015) to create a new company called Oath. Verizon hopes to attract the massive communities of people that used Yahoo and AOL to bolster users and get advertising revenues for Oath to rival those of Facebook and Google. The CEO of Oath will be former AOL CEO Tim Armstrong, further highlighting the combination of the two companies. The remainder of Yahoo’s assets will be renamed as Altaba. These assets include stakes in Yahoo Japan and an E-commerce company called Alibaba. The new CEO of Altaba will be former Yahoo board member Thomas McInerney.
The rest of Yahoo’s assets, including some employees, will merge fairly seamlessly with AOL and Verizon, with a few exceptions. The former CEO of Yahoo, Melissa Mayer, resigned as the deal was announced, and is rumored to be receiving a severance package of around 23 million dollars. She left an open letter to the company and her former employees, expressing gratitude for her time working there. However, some Yahoo employees may not feel as thankful. While Verizon has not officially announced any cuts, around 2,000 jobs are rumored to be on the chopping block during the integration process between AOL, Yahoo, and Verizon.
Yahoo, a web and software company that has long played second fiddle to Google in a number of fields, including email, search, and advertising, may change its name if a planned acquisition by telecommunications giant Verizon is completed. These plans were revealed in SEC filings submitted by Yahoo in preparation for the merger. The proposed new name for the firm is “Altaba.”
Yahoo has not yet made a statement about why it plans to change its name, but analysts think that it may be because the “Yahoo” name is too strongly associated with its largely failed search, email, and advertising competitor sites to Google. Today, most of Yahoo’s success is due to its successful news website Yahoo! News, which is the most-read website in the United States, as well as its ownership of a number of other popular websites, including photo site Flickr and social site Tumblr. The new “Altaba” name is expected to improve the image of the company by giving it a more mature and serious tone.
This move can be compared with Google’s recent decision to change the name of its parent company to Alphabet. This sort of name change helps to differentiate the company’s well-known search and web services from its other endeavors into a variety of fields including autonomous vehicle development and aerospace technology.
Verizon’s move to acquire Yahoo will put the telecommunications giant in control of Yahoo’s sprawling holdings, which has put some regulatory agencies on notice – as a result, the merger’s success is less than certain. Yahoo’s recent security scandal, in which the user data of millions of users was stolen by hackers, also endangers the deal. This means that Yahoo’s name change may not happen right away, but the company has definitely signaled a willingness to move away from its past and see what the future holds.