US telecommunications behemoth Verizon Communications Inc. is acquiring Yahoo’s core internet business for $4.8 billion, according to widespread reports.
The deal would absorb a company that helped usher in the internet age but surrendered most of the profits to later entrants like Google and Facebook. The sale includes Yahoo real estate assets, while some intellectual property is to be sold separately, people with direct knowledge of the situation, said.
The deal covers Yahoo’s portal, search engine and properties like Yahoo Mail, Yahoo Sports and popular sites Flickr and Tumblr, as well as technology used to deliver targeted ads.
Yahoo will be left with its stakes in Alibaba Group Holding Ltd. and Yahoo Japan Corp., with a combined market value of about $40 billion.
With this deal, Verizon adds another piece to the digital media and advertising business it is trying to build, having purchased AOL, the publisher of Huffington Post, TechCrunch and other sites, for $4.4 billion last year.
Besides, Verizon and Hearst have also recently announced a JV to develop digital video programming targeting the mobile millennial audience.
Verizon is expected to keep Yahoo brand to compete with Alphabet Inc.’s Google and Facebook Inc. in digital ads space.
The takeover will double the size of Verizon’s digital advertising, placing it as a distant third behind Google and Facebook in the $187 billion market.
Marissa Mayer, Yahoo’s chief executive, is not expected to join Verizon. However, she stands to receive a severance payout worth about $57 million if she is terminated as a result of the sale, after earning over $100 million in cash and equity.