Verizon originally asked for $925M discount following Yahoo breach disclosures

Dive Brief:

  • Verizon originally asked for a $925 million discount on its purchase of Yahoo's online services, per new details revealed in a regulatory filing Monday, according to media reports. Eventually receiving $350 million off its original $4.83 billion purchase price, Verizon sought the discount after Yahoo revealed that personal data was stolen from more than 1 billion of its users during breaches that took place in 2013 and 2014.

  • The filing also revealed that the remaining and most valuable parts of Yahoo — investments in Alibaba Group and in Yahoo Japan — will be used to form a new company called Altaba, which will be run by a Yahoo board member Thomas McInerney rather than Yahoo CEO Marissa Mayer.

  • Yahoo’s digital services are expected to officially become part of Verizon Communications by June.

Dive Insight:

Mayer hasn’t yet announced her plans after the deal is complete, but sources say it is very unlikely she’ll work for Verizon. If she leaves, Mayer will receive a $23 million severance package along with stock options valued at $56.8 million, according to the filing. 

It’s unclear why the two companies ultimately settled on a discount almost three times less than the amount Verizon originally asked for. It seems that Verizon was holding the cards and could have justified just about any discount given the hot water Yahoo was in after disclosing the breaches. An investigation into the breaches disclosed last year resulted in Meyer promising to forego her bonus and the the resignation of Yahoo's general counsel

Once the deal is officially closed, Verizon will work to put massive breaches behind them. The company has been working to grow its digital media business, and the Yahoo audience can go a long way in getting it there, despite Yahoo’s now tarnished reputation.

Filed Under: IT Strategy
Top image credit: Eric Hauser