**Editor’s Note: Please click here for a recap of the biggest channel-impacting mergers in May-June 2016.**
If you type “verizon.yahoo.com” you’ll get a glimpse of the future of the once-dominant Yahoo. Verizon Communications on Monday announced that it will buy Yahoo’s core internet properties and real estate for $4.83 billion in cash.
The plan is to combine Yahoo’s digital advertising and media assets with Verizon’s AOL internet business, which it bought last year for $4.4 billion. Verizon also gains Yahoo’s ad technology tools, search, mail and messenger. Besides adding vital content, these assets could help Verizon better compete with Google Alphabet and Facebook in digital ad sales.
About 3,000 of Yahoo’s patents are not included in the sale but are on the block separately under a subsidiary called Excalibur. The deal also does not include Yahoo’s cash on hand or its shares in Chinese e-commerce giant Alibaba Group Holding or in Yahoo Japan.
The deal is expected to close in early 2017. In a statement, the companies said Yahoo will continue as an independent entity until the deal receives shareholder and regulatory approval.
Yahoo was once valued at over $125 billion, and other bidders reportedly included AT&T, a group backed by billionaire Warren Buffett and various private equity and buyout firms, including activist investor Sycamore Partners.
“Both AT&T and Verizon realize they need to get into the digital content game more strongly,” says Art Wittmann, Channel Partners group VP. “Verizon [took] a first step with its purchase of AOL. Just as Comcast has been on a 20-year quest to become a media provider – NBC Universal, E!, a piece of MGM, Movies.com, SportsNet – the telcos now see themselves as digital service providers, and they need content as part of their services. Both of the infrastructure behemoths realize they need to be in the business of what goes on the ‘net as well as simply providing the ‘net. Parts of Yahoo’s content are excellent, including its sports and business coverage, and could make an excellent addition to each company’s so-far-small digital content offerings. The mobile and infrastructure markets aren’t growing. What is growing are digital services.”
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