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Verizon may modify terms of Yahoo acquisition

Verizon is still on pace to purchase Yahoo said the CEO of Verizon, Lowell McAdams. There was concern that Verizon might drop their bid for the company after the hacking scandal in which a significant amount of their user’s email accounts were exposed back in 2015 and passwords, addresses, log-in names and other critical information was found on sale on the internet in Russia.

 

While the Verizon CEO indicated that the company will not drop their bid which was $4.8 billion in cash, thy may seek a modification to the terms of the deal with a lower overall purchase price. The lower purchase price would be due to material damage being done to Yahoo’s brand and business as a result of the hack. There was no identification of the size of the price reduction or modification of terms that Yahoo is seeking as a result of the material change. Verizon only purchased certain assets of Yahoo, notably excluding Yahoo Japan and Yahoo’s ownership interest in Alibaba, the Chinese retailer.

 

The hack of email accounts and passwords was first identified in 2015 but the size and scope of the issue did not become known until the past few weeks. Over 500 million user accounts had their Yahoo email accounts hacked. Yahoo is recommending that customers sign up for dual authentication when logging into their account which is a security feature that helps to protect their accounts, but can be a distraction to users.

 

Lowell McAdams indicated that business reasons for purchasing Yahoo are still present and that they are still planning on going through with the acquisition for those reasons. Verizon is thought to be planning on combining the operations of Yahoo with their purchase of Aol in 2015 to further expand on their advertising revenues and online properties. Verizon will not only benefit from the added revenues from advertising on these properties but will also experience synergies associated with their own advertising for their wireless phone services. In addition, Verizon is trying to combat the maturation of the cell phone market with these new revenue sources.

 

There has been no response made by Yahoo’s management to the renegotiated terms that Verizon may be pursuing and no identification regarding whether Yahoo will seek out additional bids in response.