Verizon has completed its acquisition of the operating business of Yahoo for $4.48 billion, which coupled with AOL creates what the telco boasts is a global digital-media powerhouse that reaches more than 1 billion consumers.
As expected, Yahoo CEO Marissa Mayer is leaving the company with the deal’s closing. “Given the inherent changes to Marissa Mayer’s role with Yahoo resulting from the closing of the transaction, Mayer has chosen to resign from Yahoo,” the telco said in a statement. “Verizon wishes Mayer well in her future endeavors.”
The merged AOL-Yahoo organization will be called Oath, comprising more than 50 media and technology brands. Tim Armstrong, previously CEO of AOL, is now CEO of Oath, which is part of Verizon’s Media and Telematics division.
Verizon expects to cut about 15% of the workforce of the new Oath organization, representing the elimination of about 2,100 jobs.
“The close of this transaction represents a critical step in growing the global scale needed for our digital media company,” Marni Walden, Verizon president of Media and Telematics, said in a statement. “The combined set of assets across Verizon and Oath, from VR to AI, 5G to IoT, from content partnerships to originals, will create exciting new ways to captivate audiences across the globe.”
The Oath portfolio includes HuffPost, Yahoo Sports, AOL.com, MAKERS, Tumblr, Build Studios, Yahoo Finance, and Yahoo Mail.
Mayer exits Yahoo with stock holdings worth more than $200 million. The company hired Mayer, a former top engineering exec at Google, in 2012 hoping she could turn around Yahoo — once among the strongest brands in the internet sector. But after four years of steady revenue declines and shifts in strategy, Mayer and the Yahoo board opted to sell the company to Verizon last summer.
On Mayer’s watch, Yahoo was hit by two of the biggest security breaches in internet history, resulting in the theft of info on more than 1 billion user accounts. Earlier this year Yahoo’s board said it would not pay an annual bonus to Mayer because of her handling of the incidents, and she also did not receive an equity grant for 2017. The hacks led Verizon to cut $350 million from the purchase price for Yahoo’s internet businesses.
“It’s been my great honor and privilege to be a part of this team for the last five years,” Mayer wrote in a post on Tumblr. “Together, we have rebuilt, reinvented, strengthened, and modernized our products, our business, and our company. Mayer led the acquisition of Tumblr for $1.1 billion in 2013, her biggest acquisition as CEO of Yahoo; the company eventually wrote off more than half the value ascribed to Tumblr.
In her post, Mayer noted that Yahoo’s stock price more than tripled since she joined in July 2012, resulting in an increase of $43 billion in market capitalization. But the stock performance was entirely due to Yahoo’s investment holdings in Chinese ecommerce giant Alibaba Group, which predated Mayer’s tenure.
Yahoo Inc., meanwhile, as previously announced will change its name to “Altaba Inc.” effective June 16. The company’s remaining assets include a 15% equity stake in Alibaba; a 36% equity stake in Yahoo Japan; and Excalibur IP LLC, which owns certain patent assets that were not core to Yahoo’s operating business. Altaba’s CEO is Thomas McInerney, former CFO of Barry Diller’s IAC, and the company has relocated its headquarters to New York City.