It is reported that Verizon agreed to acquire Yahoo for $4.8 billion, which ended its protracted auction process. The acquisition includes the core Internet business and some real estate business of Yahoo.
The market value of Yahoo once reached $ 125 billion during the booming period. This offer for Yahoo seems worthless. The official acquisition will be announced on Monday local time. Verizon plans to reserve Yahoo’s brands after it acquires it. This April, Yahoo started auctioning its bidding process. Verizon became one of important offerers, planning to merge Yahoo into its digital media business department which acquired AOL assets last year.
The main offerers are Bain Capital LLC and TPG. Verizon submitted the bidding price of $ 3 billion in June, excluding Yahoo real estate business. Verizon owns The Huffington Post, Tech Crunch, AOL and its mobile video app go90. The acquisition of Yahoo will take over its millions of users of Yahoo Finance, Sports and News websites.
Verizon aims to apply the smartphone data to AOL and Yahoo digital advertising system to compete with Facebook and Google. According to the estimation of eMarketer, the digital advertising revenues of Google and Facebook account for over half of American digital advertising market of $ 69 billion. It is estimated that Yahoo accounts for 3.4% of this market share. Its market share keeps declining. Emarketer assumed that the advertising revenue of Yahoo 2016 will decrease to $2.32 billion from $ 2.54 billion.
Its Q2 revenue declined by 19% yoy. Yahoo confirmed that its advertising price declined by 15% and search price was 8%. Yahoo even cut 15% of its workforce this year, down to 8,800 employees.
Verizon’s agreement is a first step to save Yahoo. Yahoo might sell 3,000 patents in another auction, which is supposed to get $ 1 billion benefit.