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BizReport : Internet : July 25, 2016

Verizon to acquire Yahoo, what it means

Verizon is set to acquire Yahoo for the purchase price of $4.83 billion dollars. This just a year after mobile brand Verizon also acquired AOL. The move will integrate Yahoo with AOL.

by Kristina Knight

Lowell McAdam, Verizon Chairman and CEO, said: "Just over a year ago we acquired AOL to enhance our strategy of providing a cross-screen connection for consumers, creators and advertisers. 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."

"Yahoo is a company that has changed the world, and will continue to do so through this combination with Verizon and AOL," said Marissa Mayer, Yahoo CEO. "Yahoo and AOL popularized the Internet, email, search and real-time media. It's poetic to be joining forces with AOL and Verizon as we enter our next chapter focused on achieving scale on mobile. We have a terrific, loyal, experienced and quality team, and I couldn't be prouder of our achievements to date, including building our new lines of business to $1.6 billion in GAAP revenue in 2015. I'm excited to extend our momentum through this transaction."

What does this mean for online marketers and brands? Professor John Colley, Warwick Business School, says it is doubtful that the merge will strengthen either Verizon's or Yahoo's standing in the online world.

"Yahoo has struggled against the strength of network effects for a long time despite the various promises of CEOs. It is difficult to see how this merger will change that and indeed how Verizon will benefit from this acquisition," said Professor Colley. "Unfortunately 'Alliances of the Weak' in an attempt to make a single strong competitor very rarely work. They are usually left with a bigger 'weak' player. This seems likely with this tie-up in a market in which the 'winner takes all'. If you are not in the top two then unless you have a credible niche you will suffer."

The sale will separate Yahoo's Asian asset equity, which should help to unlock shareholder value. Because the company will now also have Verizon's resources, it is expected to build on their profile in the mobile, video and native ad spaces.

Tags: advertising, mobile marketing, Verizon, verizon acquires yahoo, Yahoo

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