US telecommunications company Verizon and internet firm Yahoo have agreed revised terms on the purchase of the latter’s operating business under a deal that will remove $350m (€326.2m) from the price tag.
Verizon in July sealed a $4.83bn deal to acquire the operating business of Yahoo. At the time a targeted completion of the first quarter of 2017 was outlined. However, the transaction has been delayed by the disclosure of two high-profile cyber breaches that exposed information from more than a billion Yahoo accounts.
Verizon has been seeking to persuade Yahoo to adjust the terms of the original deal following the incidents. Yahoo said in December that data from more than one billion user accounts was compromised in August 2013, marking the largest breach in history. In September, the company said at least 500 million accounts were affected by another breach in 2014.
In a statement released yesterday (Tuesday), Verizon and Yahoo said they have agreed to reduce the price Verizon will pay to acquire Yahoo's operating business by $350m. In addition, the two parties said they will share certain legal and regulatory liabilities arising from certain data breaches incurred by Yahoo.
Under the amended terms, Yahoo will be responsible for 50 per cent of any cash liabilities incurred following the closing related to non-SEC (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 amended 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 Reuters news agency said Verizon and Yahoo signed the deal on Sunday evening after weeks of talks that included calls with Yahoo chief executive Marissa Mayer and a meeting between Verizon counterpart Lowell McAdam and Yahoo director Tom McInerney in New York earlier this month to agree on the amount of the price reduction. The two sides are said to have had an agreement in principle about a week earlier that included a liability sharing agreement, something that Verizon reportedly decided early on that it needed to reach a deal.
In a statement, Marni Walden, Verizon executive vice-president and president of product innovation and new businesses, said: “We have always believed this acquisition makes strategic sense. The amended terms of the agreement provide a fair and favourable outcome for shareholders. It provides protections for both sides and delivers a clear path to close the transaction in the second quarter.”
Mayer added: “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.”
Verizon’s acquisition of Yahoo is now valued at approximately $4.48bn in cash. Yahoo has increased its activity in the sports sector considerably over the past year, striking partnerships with North America’s Major League Baseball and NHL ice hockey league, as well as golf’s PGA Tour.