Today’s big deal is that Verizon (VZ) has agreed to acquire the core Internet assets of Yahoo for $4.83 billion in cash. Here are five things to know about the deal.
1. This has been the most logical outcome since the beginning of Yahoo’s auction process. And that’s not just hindsight. Check out our original odds, published back in February. Verizon’s cash was cheaper than that of private equity (TPG Capital was among the final bidders), its synergies made more sense than one-off buyers (e.g., Dan Gilbert, with the backing of Warren Buffett) and it already has an obvious manager in AOL’s Tim Armstrong to take over for Marissa Mayer.
2. The deal is slated to close in Q1 2017, but Yahoo (YHOO) said during a conference call this morning that it will not rule out the possibility of non-core asset sales in the interim.
3. Remember when bankers were leaking that this deal could be worth upwards of $8 billion?
4. It appears that Marissa Mayer will remain with Yahoo through the end of the sale process, although: (a) That’s not been explicitly said; and (b) No official word on if she’ll join Verizon, though she is not expected to do so.
5. Speaking of Mayer: I vividly remember the day she was named Yahoo CEO, because it was the opening afternoon of Fortune Brainstorm Tech and she had been expected to speak (on behalf of Google). At the time, I recalled Brainstorm attendees having lots of optimism about her tenure, given their belief that she’d supercharge Yahoo’s new product portfolio, as opposed to expanding its media efforts. In the end, she mainly focused on mobilizing existing product and continuing the media focus via things like digital magazine launches.
Most importantly, however, I felt that she was in a no-lose situation: She was taking over a ship that everyone believed was sinking. If she turned things around, then she’d be hailed as a business genius. If she didn’t. . .well, of course, it sunk. Kind of like what I argued when Cerberus bought Chrysler.
This is not, however, the way things played out in the court of public opinion. A lot of that is on Mayer for a management style that rubbed certain people the wrong way. She was a first-time CEO. But part of the blame should go to Yahoo PR for letting her appear on the cover of any magazine that would have her (the higher the profile, the steeper the fall). And, to be sure, her ridiculously large compensation package annoyed shareholders. But, in the end, I stand by my original sentiments. This was a 3-alarm fire that Mayer failed to put out, rather than one she started.
