The bidding process has ended – Yahoo’s core business, including Yahoo’s advertising, content, search and mobile activities, is now in the hands of powerhouse telecom company, Verizon, thanks to a $4.83 billion cash acquisition. Verizon Chairman and CEO Lowell McAdam released the motivations behind the significant move: “The acquisition of Yahoo will put Verizon in a highly competitive position as a top global mobile media company, and help accelerate our revenue stream in digital advertising.”
This buyout will be highly integrated with Verizon’s $4.4 billion purchase of AOL that occurred a little over a year ago as a way of boosting the company’s media and advertising businesses. There’s a clear indication of Verizon wanting to diversity its revenue and operations, with these moves aimed at culminating in a merger between Yahoo and AOL to form a bigger advertising and media subsidiary. In the release concerning the acquistion, AOL CEO Tim Armstrong stated, “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.”
While acquiring Yahoo is an exciting move for Verizon, the transaction also poses significant challenges for the telecom company. Yahoo’s earnings have been dwindling and the company hasn’t been enjoying much success recently. Both AOL and Yahoo have incredibly large headcounts, with the former at 6800 employees and the latter at 8800 employees and 700 contractors – merging the two will definitely be a difficult obstacle. In the official release of the acquisition, however, Verizon provided justification for the big purchase, stating that Yahoo has an extremely large global audience, garners 225 million monthly active users on its mail platform and owns premium brands in finance, news and sports.