Telecom Verizon Set to Buy Yahoo for $5 Billion

Verizon is closing in on a deal to buy Yahoo’s core business for about $5 billion, according to sources familiar with the talks.

The telco giant has long been considered the favorite to buy Yahoo’s internet assets, which it wants to combine with AOL, which it bought last year for $4.4 billion.

Part of Verizon’s pitch to Yahoo’s board is that it is the logical choice, since it is already operating a similar business. The concept of such a deal is to combine its advertising tech assets and become the third alternative to leaders Facebook and Google. Both companies also have extensive media assets.

"If Verizon bid that high, they definitely got it, because they’re the safe bet for Yahoo," said a rival bidder.

Founded in 1995, Yahoo! was once the brightest star of the Web. But when its rivals including Google, Facebook and even few-years-old companies like Snapchat and WhatsApp have won over users, Yahoo! has not been able to maintain that glory.

Yahoo! CEO Marissa Mayer - formerly a Google executive - has spent billions on acquisitions so far to improve Yahoo's mobile products, expanding its audience by acquiring Tumblr and doubling down on premium media content.

But Mayer struggled to slow the overall ad sales decline of Yahoo! and failed.

Last Monday, the company accepted that its revenue fell 15% in the second quarter, after excluding accounting adjustments, and its operating profit fell 64%.

So, after keeping investors at bay for years, Mayer said Yahoo! would explore strategic alternatives, including selling its core assets.

Verizon has long been considered a suitable buyer for Yahoo’s Internet assets, which the telecom giant wants to combine with AOL - the American global mass media corporation bought by Verizon last year for $4.4 Billion.

Now, the two companies are in one-on-one discussions, and Verizon will reportedly acquire Yahoo! for about $5 Billion.

With the success in the wireless industry, Verizon has been buying up Internet and ad technology companies, like AOL, to compete in a mobile advertising market dominated by two big players, Google and Facebook.
And for this same reason, it is now buying Yahoo!’s ad and content businesses.

Yahoo! has millions of users, and a collection of websites like Flickr, Tumblr, Yahoo Finance, and Yahoo Sports, including some digital-ad technology like Flurry and BrightRoll.

Since the growth of Verizon’s traditional telecom business has been decreased, companies like Yahoo! and AOL would necessarily help Verizon make money from digital advertising on mobile devices.

Tim Armstrong and Mayer worked together at Google many years ago. And most importantly, as recently as two years ago, Mayer had rejected Armstrong’s efforts to merge the two companies. AOL went with Verizon, which would now be swallowing up Yahoo

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