The final result of the months-long bidding process for the operating assets of Yahoo! Inc. (NASDAQ: YHOO) was announced Monday morning by Yahoo and Verizon Communications Inc. (NYSE: VZ): the telecom giant will pay $4.83 billion in cash for Yahoo’s operating business.
The acquisition had been in the detail stage for days, and by Friday the only details left to be resolved were the final price and the announcement date. Now we know.
Verizon said that Yahoo would be incorporated with AOL and run by Verizon executive vice-president Marni Walden. Verizon will maintain the Yahoo brand.
AOL’s CEO Tim Armstrong said:
We have enormous respect for what Yahoo has accomplished: this transaction is about unleashing Yahoo’s full potential, building upon our collective synergies, and strengthening and accelerating that growth. 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.
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The deal with Verizon does not include Yahoo’s cash, its shares in Alibaba Group Holdings, its shares in Yahoo Japan, Yahoo’s convertible notes, certain minority investments and Yahoo’s non-core patents. According to the announcement, these assets will be held by a new publicly traded company once the transaction is completed.
The companies expect the transaction to close in the first quarter of 2017, and until that time they will continue to operate as separate companies.
Yahoo and Verizon noted that substantially all of Yahoo’s net cash will be returned to shareholders, but that the companies have not yet determined a specific capital return strategy.
Yahoo CEO Marissa Mayer said:
The sale of our operating business, which effectively separates our Asian asset equity stakes, is an important step in our plan to unlock shareholder value for Yahoo. This transaction also sets up a great opportunity for Yahoo to build further distribution and accelerate our work in mobile, video, native advertising and social.
Yahoo stock traded down about 0.6% in Monday’s premarket session, at $39.10 in a 52-week range of $26.15 to $39.42. The high was posted last Friday.
Verizon shares traded up about 0.7% to $56.49, in a 52-week range of $38.06 to $56.95.
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