Yahoo agreed to take a $350m cut on the original $4.8bn sale of its core business to Verizon, becoming one of the first major US companies to revise deal terms because of a cyber attack.
Verizon, the US telecoms company, will now pay the California-based internet company $4.5bn, Yahoo said on Tuesday, ending months of uncertainty about the future of the deal first agreed in July last year.
Shares in Yahoo rose by 0.7 per cent to $45.13, while Verizon was up by 0.6 per cent to $49.46 by mid-morning in New York.
Marni Walden, Verizon’s executive vice-president, said that the new terms “provide a fair and favourable outcome for shareholders. It provides protections for both sides and delivers a clear path to close the transaction in the second quarter”.
Marissa Mayer, Yahoo’s chief executive, said the company was “very excited” about joining forces with Verizon and AOL, which Verizon bought in 2015, and to separate from its more valuable stake in Chinese ecommerce group Alibaba.
“This transaction will accelerate Yahoo’s operating business especially on mobile, while effectively separating our Asian asset equity stakes,” she said. “It is an important step to unlock shareholder value for Yahoo, and we can now move forward with confidence and certainty.”
After the Verizon deal was announced last year, Yahoo disclosed that it had suffered two large cyber attacks before the sale was agreed.
In September 2016, Yahoo announced it had lost details related to 500m accounts in a breach thought to have occurred in late 2014. In December 2016, it said it had discovered that it had suffered another breach, this time affecting up to 1bn user accounts.
Yahoo is also facing a Securities and Exchanges Commission probe into whether it appropriately disclosed information about the data breach.
But Yahoo had argued that the cyber attacks had not put off users from its services, showing consistent engagement rates both before and after the announcements.
As part of the agreement, Yahoo and Verizon will equally share responsibility for any cash liabilities linked to data breaches. Yahoo will be wholly responsible for liabilities arising from shareholder lawsuits and SEC investigations.
The deal, now expected to close in the second quarter of 2017, brings to a close a long process of trying to separate Yahoo’s core business — which includes Yahoo Mail, News, Finance and Fantasy Football — from its more valuable stake in Alibaba.
Ms Mayer, brought in to lead a turnround at Yahoo in 2012, has faced investor pressure ever since Alibaba went public in September 2014. The sale with Verizon was agreed to after Yahoo struggled to find a tax-efficient way to spin off the stake.
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