The confirmation of the deal comes 11 months after the first announcement of the planned acquisition. Finalization of the agreement was hindered due to revelations earlier this year that Yahoo delayed the disclosure of two data breaches from 2013 and 2014. The theft of more than 1.5 billion user records is believed to have dropped the value of the deal by $350 million.
Duplication of roles across finance, HR, marketing and admin were always expected to result in some job losses however, sources have confirmed to Tech Crunch that the acquisition will result in redundancies totaling 15% of Yahoo and AOL’s 14,000-strong workforce.
Meanwhile, the top executives are expected to depart with handsome payments into the millions, particularly with Yahoo’s stock price already rising by 8.5% (at the time of publishing this post). Yahoo CEO, Marissa Mayer, was behind a 46% reduction of the Yahoo workforce over her five year tenure and will receive a payout of $264 million. The Chief Revenue Officer is expected to walk away with $22 million and the Chief Financial Officer, $12 million as a result of the deal.
Verizon’s incentive to buy Yahoo’s core business was clear from the beginning with Verizon Chairman and CEO, Lowell McAdam, stating last year: “The acquisition of Yahoo will put Verizon in a highly competitive position as a top global mobile media company, and help accelerate our revenue stream in digital advertising.”
The company’s move into the digital advertising market will leave them well-armed with Verizon acquiring all of Yahoo’s advertising, content, search and mobile business.
However, competition is rife with Google and Facebook currently dominating 85% of internet advertising market share in the US (according to Mary Meeker’s 2017 Internet Trends Report). It’s a fruitful market to be part of, even if third choice, with global internet ad spend growing from $50 million in 2008 to over $200 million in 2017.
Following the closure, both companies have announced branding for the new entity under AOL and for what remains of Yahoo. The now Verizon-AOL-Yahoo business will be known as Oath and Yahoo will be renamed to Altaba. Altaba will be the holding company of the cash from the Yahoo sale in addition to its significant shares in Alibaba Group and Yahoo Japan.
With the last major milestone now complete, the deal is expected to formally close on 13 June, 2017.