Apollo Buys Yahoo, AOL From Verizon for $5 Billion -- Update
May 03 2021 - 9:27AM
Dow Jones News
By Micah Maidenberg
Apollo Global Management Inc. agreed to pay about $5 billion to
acquire Yahoo and AOL from Verizon Communications Inc. as the
wireless giant exits its ill-fated foray into the media
business.
The private-equity firm is paying $4.25 billion in cash for a
majority stake in the media assets and providing Verizon with
interests in the businesses totaling $750 million. In addition,
Verizon will keep a 10% stake in a new company, called Yahoo, that
will be formed to operate the business.
The Wall Street Journal earlier reported Apollo's interest in
Verizon Media's business, which mostly struggled to grow against
Alphabet Inc.'s Google and Facebook Inc. Verizon Media had about $7
billion in revenue last year.
Other suitors previously showed interest in buying off certain
pieces of the media unit, which includes websites such as
TechCrunch and Yahoo Finance, but weren't willing to make an offer
for the whole portfolio, according to a person familiar with the
matter.
Verizon collected some of the web's best-known brands starting
in 2015 with its purchase of AOL, followed by its 2017 acquisition
of Yahoo. AOL's then-chief, Tim Armstrong, called the new business
a super channel for advertisers to reach hundreds of millions of
users.
Executives framed the newly named Oath business as an
alternative way for marketers to reach potential customers outside
of a digital ecosystem dominated by Google, Facebook Inc. and
Amazon.com Inc. But the stitched-together media group couldn't keep
up with its technology rivals' explosive sales growth, and Verizon
in 2018 wrote down about half of the value of the media brands it
had acquired.
In 2018, Verizon named Hans Vestberg CEO, picking a
telecom-industry veteran with a penchant for sketching out
engineering concepts on whiteboards for its top job. The Swedish
transplant has spent little time discussing media and has more
often touted the cellphone carrier's plan to boost revenue through
the construction of a next-generation wireless network. Verizon has
been shrinking the media unit, cutting jobs and selling off its
Tumblr blogging platform and HuffPost news operation.
Guru Gowrappan, the current head of Verizon Media and a former
Yahoo executive, will continue to run the business after the deal.
The companies said the business reaches nearly 900 million monthly
active users world-wide. The partners expect the transaction to
close in the second half of the year.
Other telecom companies are likewise reassessing their
priorities. The Journal has reported that AT&T Inc. last year
began to field bids for much of the digital ad business formerly
known as Xandr. The unit, which includes operations acquired from
the AppNexus digital ad exchange for $1.6 billion in 2018, has also
increased sales but has failed to meet executives' aggressive
targets.
Ben Mullin and Miriam Gottfried contributed to this article
Write to Micah Maidenberg at micah.maidenberg@wsj.com
(END) Dow Jones Newswires
May 03, 2021 09:12 ET (13:12 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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