Verizon Will Pay $350 Million Less for Yahoo

SAN FRANCISCO — Faced with unknown costs related to two huge data breaches, Yahoo and Verizon Communications announced Tuesday that they had agreed to shave $350 million from the price that Verizon would pay to buy Yahoo’s core internet businesses.

The two companies said they would also share liabilities related to the breaches, which occurred in 2013 and 2014 but were only disclosed last year after the deal was announced.

The revised agreement, now valued at $4.48 billion, paves the way for the deal to proceed to a shareholder vote as early as April, although securities regulators are still assessing how Yahoo disclosed information about the breaches to investors. Yahoo, which is winding down its own investigation of the breaches, will share more details about the incidents and their impact in the next few weeks when it makes required regulatory filings.

Yahoo reiterated on Tuesday that it still expected the deal, originally struck last July, to close by the end of June. The outlines of the new agreement were reported last week.

Consummation of the sale to Verizon would bring closure to a negotiation that has stretched on for nearly three years as Yahoo’s board and its chief executive, Marissa Mayer, considered various plans to separate the company’s fading internet businesses from its much more valuable investment stakes in Alibaba, China’s largest e-commerce company, and Yahoo Japan, an affiliated company controlled by SoftBank Group.

Yahoo still faces dozens of lawsuits related to the theft of its user data. Hackers stole information, including weakly encrypted passwords, on one billion user accounts in 2013, later selling the information online. The year after, another set of hackers, which Yahoo believes were sponsored by a foreign government, stole similar information on more than 500 million accounts.

The two breaches, the largest known hacks of a private corporation, came amid infighting at Yahoo over security investments and safety measures that would inconvenience users.

Yahoo has argued that disclosure of the breaches had little effect on use of its services. In a securities filing on Tuesday, the company provided charts indicating that after the larger breach was disclosed in December, the number of pages viewed on its core sites like news and sports fell compared with the previous year. However, other measures like overall page views and the number of email messages sent and received showed no significant drop.

Verizon and Yahoo, whose internet advertising businesses are tiny compared with juggernauts like Google and Facebook, are eager to move forward on integrating their internet operations.

“We have always believed this acquisition makes strategic sense,” Marni M. Walden, the Verizon executive vice president who oversees product innovation and new businesses, said in a statement. “We look forward to moving ahead expeditiously so that we can quickly welcome Yahoo’s tremendous talent and assets into our expanding portfolio in the digital advertising space.”

Verizon intends to keep the Yahoo brand separate from AOL, another internet pioneer that it acquired in 2015. But executives hope to use digital advertising technology and a unified sales force to court advertisers who want to reach the companies’ combined audience of well over one billion active internet users.

Yahoo still attracts large audiences to its sports, news and financial sites, and its email service retains a loyal audience. Although Yahoo and AOL do not carry the clout they had during the early days of the web, marketers do want to preserve alternatives to Google and Facebook, which increasingly dominate digital advertising.

It’s unclear whether Ms. Mayer, a former Google executive who was hired as Yahoo’s chief in 2012, will remain with Verizon after the deal closes. Ms. Mayer failed to turn around Yahoo’s struggling internet businesses and was forced to write off much of the value of Tumblr, her biggest acquisition.

After the sale, Yahoo’s Asian investments will remain in a stub company, called Altaba, which will study how to extract the maximum value from them. The Alibaba stake has a face value of about $39 billion and the Yahoo Japan stake is worth about $9 billion, but any transactions to dispose of the shares are likely to incur multibillion-dollar tax bills.

source:nytimes.com