In its plan to exit the media business, the telecommunication giant Verizon announced on Monday that it will sell off Yahoo and AOL to a private equity firm Apollo Global Management at $5 billion.
Verizon acquired both brands not long ago at $9 billion; Yahoo’s internet business in 2016 for $4.48 billion and the digital conglomerate AOL in 2015 for approximately $4.4 billion. Verizon hoped to use AOL’s advertising platform to sell digital advertising.
Yahoo had suffered two major data breaches in 2013 and 2014, but Verizon was ready to share the legal and regulatory liabilities arising from the two breaches.
Verizon named both brands’ operations Oath, but Google and Facebook’s growth speed dashed its hopes to bolster its digital advertising and mobile platforms.
Verizon will retain 10% or the minority stake, and the new brand will be called Yahoo when the transaction is closed in the second half of 2021. In a statement, Hans Vestberg, Verizon CEO, said, “Verizon Media has done an incredible job turning around over the past two and a half years, and the growth potential is enormous.”
The company will now focus its efforts “to aggressively pursue growth areas and stands to benefit its employees, advertisers, publishing partners and nearly 900 million monthly active users worldwide.”
In the release Guru Gowrappan, Verizon Media CEO, said, “with Apollo’s sector expertise and strategic insight, Yahoo will be well-positioned to capitalize on market opportunities, media, and transaction experience and continue to grow our full-stack digital advertising platform.”
Reed Rayman, a Private Equity Partner at Apollo, said,” We are thrilled to help unlock the tremendous potential of Yahoo and its unparalleled collection of brands.
David Sambur, Senior Partner and Co-Head of Private Equity at Apollo, said, “We are big believers in the growth prospects of Yahoo and the macro tailwinds driving growth in digital media, advertising technology, and consumer internet platforms.”
In this deal, Verizon will receive $4.25 billion in the form of cash and $750 million as preferred interests and the minority stake in Verizon Media.
Further, the transaction entails Verizon Media assets such as its business (Yahoo and AOL) and its brands. Guru Gowrappan will continue serving as the CEO of Yahoo (the new brand).
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