With renegotiation complete, Verizon to pay $350 million less for Yahoo

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According to reports this morning, the final price Verizon has agreed to pay for Yahoo is $350 million less than the $4.8 billion originally agreed. That’s a $100 million greater reduction than previously indicated.

One of the keys to the renegotiated transaction — and a likely reason the price didn’t drop further — is the fact that Verizon and the Yahoo successor Altaba will share liability for the fallout from data breaches and hacks.

As USA Today reported, “Yahoo will be fully responsible or any cash liabilities incurred following the deal’s closing arising from shareholder lawsuits and Securities and Exchange Commission investigations related to the breaches. Yahoo will be responsible for 50% of any liabilities related to any third-party litigation and non-SEC government investigations related to the breaches.”

Verizon sought to renegotiate the acquisition price after the revelation of massive hacking episodes from 2013 and 2014. The original deal was announced in July 2016.

The closing of the deal this quarter will conclude a tumultuous decade for Yahoo, which spurned an offer to be acquired by rival Microsoft in 2008 for roughly $45 billion. The period saw a succession of CEOs, from co-founder Jerry Yang and Carol Bartz to Scott Thompson (the William Henry Harrison of tech CEOs). In 2012 the Yahoo board named Google’s Marissa Mayer as CEO.

Mayer did much to revive and reinvigorate the company but was ultimately unable to restore growth to its core display ad business, frustrating institutional investors. However the task was next to impossible, given the rise of Facebook and Google’s display business. Yet Yahoo remains the number three US internet company, just after Facebook in terms of traffic. It’s also one of a small number of marquee internet brands.

The challenge now for Verizon will be to smartly combine its AOL and Yahoo properties and to invest in Yahoo to maintain its brand and strengthen its competitive position in the market.

About The Author

Greg Sterling

Greg Sterling is a Contributing Editor at Search Engine Land. He writes a personal blog, Screenwerk, about connecting the dots between digital media and real-world consumer behavior. He is also VP of Strategy and Insights for the Local Search Association. Follow him on Twitter or find him at Google+.