On 3 May 2021, Verizon had announced that it is selling Yahoo and AOL properties to Apollo Global Management. It is estimated that the company has sold Yahoo and AOL for almost half of what it had paid for acquiring the company. Let’s look at why Verizon sold Yahoo and AOL for half the price.
About the Deal
Verizon has sold its properties, that is Yahoo and AOL to Apollo Global Management. The deal is said to be worth USD 5 billion which is half of what the company had paid for both the properties which were around USD 9 billion.
Verizon will maintain around a 10 % stake in the company in Yahoo and the company will continue to be led by the CEO Guru Gowrappan.
In 2015 for the company AOL, Verizon had actually paid around USD 4.4 billion and two years later, the company had paid around USD 4.5 billion for the acquisition of Yahoo.
The media divisions included properties such as Yahoo Sports, Tech Crunch and Engadget. All the media companies were consolidated under the inappropriate name Oath, which was later renamed as Verizon Media Group in the year 2018.
At the time of acquisition, people connected to the internet through AOL and its front page was Yahoo. Yahoo and AOL were at their peak with a market capitalization of more than USD 200 billion for AOL and Yahoo with a market capitalization of more than USD 100 billion.
Reason for the Sale
The main reason for the sale of Verizon’s Yahoo and AOL was due to
their failed attempt to turn itself into a major player in the online advertising market and digital content. Since at the time of the acquisition of AOL and Yahoo both the companies were at their peak in the market with a huge market capitalization.
In the early days of the internet era, both AOL and Verizon were success stories of the internet. Later both the companies failed to catch up with the trends in the market.
AOL had become a corporate giant after it sold its dial-up internet services for millions but later the company started declining and faded as a dial-up service which was replaced by broadband.
While Yahoo was a widely known and popular search engine and a web service portal, but later its competitor Google started capturing the market which led its business to suffer. AOL which is Verizon’s ad tech business is said to be suffered and is under closing conditions.
This deal will be a closing for Verizon’s experiment into the media production and advertising businesses.
Recent Sales of Verizon
In the year 2019, the company had sold Tumble for an amount that was not disclosed. The estimated amount is said to be below USD 3 million but Yahoo in the year 2013 had paid around USD 1.1 billion for acquiring the blogging platform.
In the year 2020, the company had sold HuffPost to Buzzfeed which was acquired by AOL in the year 2011 for an amount of USD 315 million.
Apollo Capital Management
Apollo Capital Management is a private equity firm. The company owns Cox Media, Arts and Crafts retail chain Michaels and Venetian resort in Las Vegas. The company also owns the tech companies which include Shutterfly and Rackspace which makes the company more familiar with the tech industry.
Reed Rayman who is the partner of Apollo said that the company is excited to unlock the tremendous potential of Yahoo and its unique collection of brands. He added that they have a great amount of respect and admiration for the work and progress the entire organization has made over the last several years.
He said that they are looking forward to working with the CEO Guru and his talented team and the partners at Verizon in order to increase the growth of Yahoo in the coming future.
How much did Verizon pay for Yahoo?
Verizon acquired Yahoo for $4.5 billion.
How much did Verizon pay for AOL?
AOL was acquired by Verizon Communications for $4.4 billion
Who is the parent company of Verizon?
Verizon Communications is the parent company of Verizon.
The deal between Apollo Capital Management and Verizon is expected to close by the second half of 2021. Verizon has plans to focus on its 5G network once it gets rid of the media arm.