Ending a storied chapter in Silicon Valley history, Verizon is the winning bidder for Yahoos internet business, and will pay $4.83 billion for the core of the troubled company, the two firms confirmed Monday.
The deal will be finalized in the first quarter of 2017, pending approval from shareholders and regulators. Yahoos stakes in Chinese commerce giant Alibaba and Yahoo Japan, worth about $40 billion combined, will remain with the Sunnyvale firm, which will be renamed as a registered investment company.
Yahoo CEO Marissa Mayer said in a conference call Monday she would stay on through the transition.
Yahoo is a company that has changed the world, and will continue to do so through this combination with Verizon and AOL, Mayer said. Yahoo and AOL popularized the internet, email, search and real-time media. Its poetic to be joining forces with AOL and Verizon as we enter our next chapter focused on achieving scale on mobile.
Mayer, if ultimately let go by Verizon, would reap a $55 million golden parachute, according to a Securities and Exchange Commission filing.
Verizon was not the highest bidder, Yahoo board member Tom McInerney said.
Verizons transaction was the one that was the best for shareholders, McInerney said.
Verizon will receive all of the Sunnyvale companys real estate holdings, Yahoo chief financial officer Ken Goldman said, but a collection of patents described by Yahoo as non-core will stay with Yahoo.
Officials with Verizon, which bought digital media company AOL last year for $4.4 billion, said the purchase of Yahoo will create a major new player in digital advertising, and boost ad revenue. 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, said AOL CEO Tim Armstrong.
The sale proceeds, minus money needed to operate Yahoo until the deal closes, plus $7.7 billion Yahoo has in cash, will be returned to shareholders, McInerney said.
The sale caps five months of speculation about the fate of the once-mighty tech icon and highlights the dramatic fall of a company that had a market capitalization of more than $125 billion during the dot com boom.