Verizon Communications will take a $500 million pretax charge related to its acquisition of Yahoo’s operating businesses, a deal that closed Tuesday.
The charge for severance, integration and other acquisition-related costs will be recorded in the second quarter of 2017, Verizon disclosed in an SEC filing Thursday. The company is slashing 15% of the workforce of the combined AOL-Yahoo division, representing the elimination of about 2,100 jobs. The merged group has been renamed Oath and is led by ex-AOL CEO Tim Armstrong.
In the filing, Verizon also said expects to achieve over $1 billion in cumulative cost savings on operating expenses through 2020 because of synergies from the deal.
Verizon CEO Lowell McAdam (pictured above), speaking at an investor conference last month, said the Yahoo acquisition didn’t represent a “transformational” mergers and acquisition. The telco has shied away from those, he said, because “you end up with AOL Time Warner, things that are difficult to manage.”
With the closing of Verizon’s deal for the Yahoo internet businesses, former Yahoo chief Marissa Mayer resigned from the company after five years in the role.
Armstrong has touted the bigger scale of Oath, pooling more than 50 media and tech brands from AOL and Yahoo to reach more than 1 billion users worldwide. The company’s theory is that under one roof, AOL and Yahoo — once among the biggest and most powerful internet companies in the world — will more efficiently reach large audiences.
Oath also will serve as the launch pad for Verizon to test out an over-the-top TV service, McAdam said last month.