Yahoo to Pay $1.1 Billion For Tumblr

Deal for Micro-Blogging Platform is Part of Effort to Jumpstart Yahoo’s Sluggish Growth
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In a bid to revitalize its offerings and attract younger users, Yahoo has agreed to acquire Tumblr for about $1.1 billion.

The deal is expected to close in second half of 2013.

The move to acquire the micro-blogging and social networking platform would strengthen Yahoo’s mobile presence and provide it with a fast growing new audience.

In recent months, Yahoo executives have repeatedly stressed the importance of attracting younger users and improving their products if they want to speed up their growth, which has lagged significantly behind the rest of the industry.

Tumblr currently has more than 300 million monthly unique visitors, with 120,000 signups every day. The platform gets about 900 posts per second and 24 billion minutes spent on site each month, according to the companies.

On mobile, more than half of Tumblr's users use its mobile app, with an average of 7 sessions per day.

The combination is expected to grow Yahoo!'s audience by 50 percent to more than a billion monthly visitors, and to grow traffic by approximately 20 percent.

As part of the agreement, Tumblr will be independently operated as a separate business and David Karp will remain CEO.

The deal would strengthen Yahoo’s mobile presence and at the same time allow Tumblr to tap into Yahoo’s advertising infrastructure and better monetize its offerings.

"Tumblr is redefining creative expression online," said Yahoo! CEO Marissa Mayer in a statement. "On many levels, Tumblr and Yahoo! couldn't be more different, but, at the same time, they couldn't be more complementary. Yahoo is the Internet's original media network. Tumblr is the Internet's fastest-growing media frenzy. Both companies are homes for brands - established and emerging. And, fundamentally, Tumblr and Yahoo! are both all about users, design, and finding surprise and inspiration amidst the everyday."

In announcing the deal, David Karp, CEO of Tumblr explained in a statement that “our team isn't changing. Our roadmap isn't changing. And our mission — to empower creators to make their best work and get it in front of the audience they deserve — certainly isn't changing. But we're elated to have the support of Yahoo! and their team who share our dream to make the Internet the ultimate creative canvas. Tumblr gets better faster with more resources to draw from."