Reports surfaced last week that the Verizon was near a deal with Yahoo to cut as much as $350 million from the deal. The price reduction follow’s Yahoo’s disclosure of two massive user-data breaches affecting more than 1 billion accounts — months after the companies had reached their initial agreement in July 2016.
The deal is expected to close in the second quarter of 2017, the companies said. Under the amended terms, Yahoo will be responsible for 50% of any cash liabilities incurred following the closing related to non-SEC government investigations and third-party litigation related to the breaches. Liabilities arising from shareholder lawsuits and SEC investigations will continue to be the responsibility of Yahoo (which will change its name to Altaba Inc. following the deal closing).
Also under the amended terms, the data breaches — or losses arising from them — will not be taken into account in determining whether a “business material adverse effect” has occurred or whether certain closing conditions of Verizon’s acquisition of the Yahoo businesses have been satisfied.
“The amended terms of the agreement provide a fair and favorable outcome for shareholders,” Marni Walden, Verizon EVP and president of product innovation and new businesses, said in a prepared statement. “It provides protections for both sides and delivers a clear path to close the transaction in the second quarter.”
Yahoo CEO Marissa Mayer said in a statement: “We continue to be very excited to join forces with Verizon and AOL. This transaction will accelerate Yahoo’s operating business especially on mobile, while effectively separating our Asian asset equity stakes.”
Verizon wants to couple Yahoo’s 1 billion-plus monthly user base, which includes some 600 million mobile users, with AOL’s audience. “We look forward to moving ahead expeditiously so that we can quickly welcome Yahoo’s tremendous talent and assets into our expanding portfolio in the digital advertising space,” Walden said.
The two hacks Yahoo disclosed forced additional reviews of Verizon’s acquisition and delayed the closing, which originally was expected in Q1. In September 2016, Yahoo announced that information on at least 500 million email accounts was stolen by “state-sponsored” hackers in 2014. That was believed to be the biggest-ever data breach on record until December, when Yahoo disclosed that data from more than 1 billion user accounts was stolen by an unknown party in 2013.
Mayer is expected to join the telco at least for an interim transition period, with AOL CEO Tim Armstrong assuming oversight of the combined AOL-Yahoo group. Armstrong said in an interview last month with Variety that Mayer is “in a mode where she wants to see them through to the next iteration. Then depending on what the next phase is, we’ll make a decision [about her future role].”
Once the Verizon deal closes, Mayer will resign from Altaba’s board along with six other current Yahoo board members. The new Altaba Inc. will primarily be an investment-holding company whose major asset will be shares of China’s Alibaba Group.