By Dylan Walko
Technology & Innovation Writer
Throughout the past year, merger and acquisition (M&A) activity has been rampant throughout the investment-banking world. One of the headline deals that has been in the works that has finally come to fruition is the acquisition of Yahoo Inc. by Verizon Communications Inc.
The merger first came to public knowledge in July for a price of $4.83 billion. Verizon’s reasoning behind the acquisition of Yahoo’s core business was to further establish a repository of big data. Yet, due to players like Google, Verizon is simply acquiring a “battered internet giant” reports Bloomberg. When looking at the overall market share for Yahoo, they currently rank third with only 6.39% behind Bing (7.96%) and Google (77.82%).
Along with this, Verizon is looking to expand its horizons in the digital advertising industry, which is headed by Facebook and Google. For Verizon, if they truly want to get the full value out of the deal, Yahoo’s core business model will either need to be revamped or cannibalized and used solely for customer data sourcing.
Although, in the early stages of the deal things seemed to be on track for a first-quarter finish in 2017. News of class-action lawsuits brought forth against Yahoo have delayed the signing until later this year. Two massive cyber-attacks against Yahoo allowed for the breaching of more than one billion accounts.
With such heavy news and skepticism in the integrity of the company, Verizon had originally sought to almost triple the price reduction on the deal before finally coming to terms with a $350 million cut that put the final price tag at $4.48 billion, reports Reuters.
Integration of leadership is also a major factor in the deal. Yahoo CEO Marissa Mayer will be moving on but not without a $23 million Gold Parachute severance package that leaves Ms. Mayer with $20 million in equity and $3 million in cash. Other key players that will be moving around within the organization are Yahoo co-founder David Filo, CFO Ken Goldman, CRO Lisa Utzschneider and General Counsel Ronald S. Bell.
Once the sale of its core internet assets is completed Yahoo will be renamed Altaba as they look to become an investment company with stakes in Alibaba and Yahoo! Japan.
With continued struggle for market share, some suggestions have proposed that Verizon take a more aggressive stance on merger deals in the near future, similar to AT&T, to try to combat the deep footing that corporations such as Google and Facebook have in the industry. With these big data acquisitions, Verizon may be able to find a niche in their own core businesses to establish dominance in the field.
A version of this article appeared in the Tuesday, March 21st, 2017 print edition.
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