Finance

Verizon Says Data Breach ‘Material’ to Yahoo Deal

Reports claim deal could be renegotiated 10/13/2016 5:16 PM Eastern

Verizon Communications confirmed reports that it believes a two year-old data breach at Internet search pioneer Yahoo is “material,” which could lead to the parties going back to renegotiate terms of their pending merger.

 

Verizon agreed to purchase Yahoo in July for $4.83 billion, a deal which would combine the search pioneer’s assets with Verizon’s AOL division. The deal was expected to close in the first quarter of 2017.

 

Shortly after the deal was announced, though, Yahoo revealed a massive data breach involving more than 500 million accounts that occurred about two years ago. The breach, which included customer e-mail addresses, birth dates, telephone numbers and encrypted passwords, came to light in September, about two months after Verizon and AOL had announced their deal.

 

Several reports had said that Verizon was considering renegotiating the deal in the wake of the hack – The New York Post said Oct. 6 that Verizon was looking to lower the Yahoo purchase price by as much as $1 billion.  Earlier this week at a California investment conference, Verizon CEO Lowell McAdam denied reports that the deal was in danger, but left the door open for renegotiation.

 

According to reports, McAdam said at the conference that the $1 billion price cut was “total speculation,” but added that the company was still figuring out what impact the breach may have.

 

At a public policy roundtable Thursday in Washington, D.C., that impact became a little more certain.

 

“I think we have a reasonable basis to believe right now that the impact is material and we're looking to Yahoo to demonstrate to us the full impact,” Verizon’s general counsel Craig Silliman said at the roundtable, which was attended by about a dozen reporters, according to Verizon spokesman Bob Varettoni. “If they believe that it's not then they'll need to show us that.”

 

Varettoni said Verizon would have no further comment. “Craig’s quotes stand on their own,” Varettoni said in an e-mail message.

 

“We are confident in Yahoo’s value and we continue to work towards integration with Verizon,” Yahoo said in a statement.

 

     

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