Yahoo agreed to slash the price of the pending acquisition of its Internet business by Verizon by $350 million, paving the way to closing a transaction that has been marred by past data breaches at the Internet pioneer.
Verizon agreed to purchase Yahoo’s Internet business in July for $4.83 billion. But soon after the deal was announced, Yahoo revealed that it had lost hundreds of millions of email addresses and other customer information in a series of data breaches. That touched off an investigation into the matter by both companies. Last week, they were close to reaching a compromise, with reports estimating the deal price would be reduced by $250 million to $300 million.
In a statement Tuesday Verizon said that it and Yahoo had agreed to reduce the price by $350 million. In addition, Verizon and Yahoo will share certain legal and regulatory liabilities arising from certain data breaches incurred by Yahoo.
“We have always believed this acquisition makes strategic sense,” said Verizon executive vice president and president of Product Innovation and New Businesses Marni Walden in a statement. “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.”
“The amended terms of the agreement provide a fair and favorable outcome for shareholders,” she added. “It provides protections for both sides and delivers a clear path to close the transaction in the second quarter.”
Under the amended terms, Yahoo will be responsible for 50% of any cash liabilities incurred following the closing related to non-Securities and Exchange Commission government investigations and third-party litigation related to the breaches. Liabilities arising from shareholder lawsuits and SEC investigations will continue to be the responsibility of Yahoo.
Also under the new terms, the data breaches or losses arising from them will not be taken into account in determining whether a “Business Material Adverse Effect” has occurred or whether certain closing conditions have been satisfied.
The deal is now expected to close in the second quarter of this year.
“We continue to be very excited to join forces with Verizon and AOL,” Yahoo CEO Marissa Mayer said in a statement. “This transaction will accelerate Yahoo's operating business especially on mobile, while effectively separating our Asian asset equity stakes. It is an important step to unlock shareholder value for Yahoo, and we can now move forward with confidence and certainty. We have a terrific, loyal, experienced team at Yahoo. I'm incredibly proud of our team’s strong product and financial execution in 2016, setting the stage for a successful integration.”