When Verizon decided to acquire yahoo for $4.83 billion, many were surprised since Yahoo is a troubled company and Verizon is in a much better position. However, things seem to be working out well in Verizon’s favor after the company managed to cut $350 million off the original Acquisition price.
The massive discount came about after it was reported that Yahoo was hacked several times, which caused a public image meltdown. Apparently, over 500 million accounts were breached back in September of 2016, which is a record for the tech industry.
It didn’t take long for Yahoo to break its own record when the company reported that in December of 2016, 1 billion accounts were breached in a separate attack.
Furthermore, Yahoo faced immense backlash for creating tools to help the U.S. government spy on citizens of the country.
Ever since the breaches, the deal between Verizon and Yahoo has been on shaky grounds. However, Verizon has yet to lose confidence in Yahoo’s 1 billion monthly active users, and as such, the need is there to continue with the acquisition, but at a cheaper price.
"We have always believed this acquisition makes strategic sense. 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," according to Marni Walden, Verizon's executive vice president, in a statement.
Smooth Sailing For Verizon? Not Even Close
While the price drop is great, it came with an interesting condition. Both Verizon and Yahoo must share the legal burdens that will come due to the hacking scandal. Furthermore, we understand Yahoo is under investigation by the US Securities and Exchange Commission for allegedly failing to inform investors about the hacks in a timely manner.
The new terms claim Yahoo must pay half of the cost of any lawsuit related to the hack that has nothing to do with the US Securities and Exchange Commission. Now, if shareholders decide to sue, Yahoo must take full responsibility and pay whatever cost such lawsuits might bring without Verizon’s help.
Important Acquisition For Verizon
Verizon wants to compete directly with the likes of Google and Facebook, and this is why the company so badly needs the Yahoo acquisition. Digital advertisement is a major field, and Verizon does not want to be left out of the great game.
