The expected closing date of Verizon's deal to buy Yahoo is pushed back to the second quarter from the first.
Verizon's Deal To Acquire Yahoo
According to The Wall Street Journal, Yahoo announced on Monday, Jan. 23, that its $4.8 billion deal with Verizon is expected to close a quarter later than expected. The reason invoked for the delay is the fact that both sides have to deal with the fallout of two massive data breaches disclosed Yahoo. The hacks were announced by the internet company in September and December, casting a shadow over the future of Verizon's agreement to acquire Yahoo's core internet business.
Previously, the deal was expected to close in the first three months of 2017, but now the deal's closure is pushed into the second quarter. According to CNBC, Verizon agreed to buy Yahoo's core business in July 2016. Verizon aims to broaden the scale of its AOL media offerings and acquiring Yahoo's internet core business could help supporting its business expansion strategy.
Yahoo shared a chart in a quarterly earnings report showing a slight decline in searches, page views and email messages sent and read compared with statistics on Dec. 14. At that time the company announced a second data breach affecting over one billion user accounts. Because they didn't show a major decline, Verizon can still be encouraged by Yahoo's user engagement numbers. However, it appears that, before making a final determination, the communications company still needs more time to monitor the impact.
Yahoo CEO Marissa Mayer highlighted the continued stability in company's user engagement trends and said in a statement that the opportunities with Verizon are still looking bright. However, Yahoo skipped its conference call with market analysts, as it also did the previous quarter.
Investors are still optimistic that the deal would go through. Yahoo's stock rose on Monday to $42.70 or nearly 1 percent in after-hours trading. On the long term, after the disclosure on Dec. 14 or the second hack, Yahoo's stock has risen to about 4 percent.
The remaining company would be called Altaba, in case that the sale of Yahoo's core internet business will be completed. The new name would contain Yahoo's stake in Alibaba as well as Yahoo Japan.
Other Challenges To Closing The Deal
Another challenge that complicates matters for the deal is an investigation started by the Securities and Exchange Commission. The investigation aims to clarify whether Yahoo should have disclosed the data breaches sooner.
Yahoo disclosed in September the 2014 theft of more than 500 million user accounts. The stolen personal data included names, dates of birth, email addresses, encrypted passwords and telephone numbers and encrypted passwords. Then the company said in mid-December that it was hit with a different massive data breach in 2013, compromising more than one billion user accounts.
Verizon was close to an agreement with Yahoo on ways of handling future hacking liabilities before the company disclosed the second hack. However, the disclosure put things on hold and amplified concerns among investors that the accord would fall apart.
Yahoo's financial health was overshadowed by these disclosures of the hacks. Yahoo said on Monday that its overall revenue rose 16 percent to $1.47 billion. Revenue rose 25 percent to $590 million when looking at the growing areas of video, mobile, native and social ads.
