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Verizon moves for Yahoo in near $5bn deal

US telecommunications company Verizon has today (Monday) sealed a $4.83bn (€4.38bn) deal to acquire the operating business of internet company Yahoo.

The deal follows months of speculation over Yahoo’s future direction. Verizon was said to be the leading contender to acquire Yahoo’s online business following the closure of the first round of bidding in April.

The addition of Yahoo to Verizon, which also acquired AOL last year, will create one of the largest portfolios of owned and partnered global brands with extensive distribution capabilities. Combined, AOL and Yahoo will have more than 25 brands in its portfolio.

The sale does not include Yahoo’s cash, its shares in Chinese conglomerate Alibaba Group Holdings, its shares in Yahoo Japan, Yahoo’s convertible notes, certain minority investments, and Yahoo’s non-core patents – known as the Excalibur portfolio.

These assets will continue to be held by Yahoo, which will change its name at closing and become a registered, publicly traded investment company. Yahoo said it will provide additional information about the investment company at a future date.

Lowell McAdam, Verizon chairman and chief executive, said: “Just over a year ago we acquired AOL to enhance our strategy of providing a cross-screen connection for consumers, creators and advertisers. The acquisition of Yahoo will put Verizon in a highly competitive position as a top global mobile media company, and help accelerate our revenue stream in digital advertising.”

Yahoo will be integrated with AOL under Marni Walden, executive vice-president and president of the product innovation and new businesses organisation at Verizon.

Marissa Mayer, chief executive of Yahoo, said: “Yahoo is a company that has changed the world, and will continue to do so through this combination with Verizon and AOL. The sale of our operating business, which effectively separates our Asian asset equity stakes, is an important step in our plan to unlock shareholder value for Yahoo. This transaction also sets up a great opportunity for Yahoo to build further distribution and accelerate our work in mobile, video, native advertising and social.”

Yahoo has increased its activity in the sports sector considerably since the turn of the year, striking partnerships with North America’s Major League Baseball and NHL ice hockey leagues, as well as golf’s PGA Tour. In March, Yahoo also launched a new service dedicated to coverage of major esports events around the world.

The deal is subject to customary closing conditions, approval by Yahoo’s shareholders, and regulatory approvals, and is expected to close in the first quarter of 2017. Until the closing, Yahoo will continue to operate independently.