WASHINGTON: Verizon announced on Monday that it will sell fading internet stars Yahoo and AOL to a private equity firm for $ 5 billion, ending the communications giant’s internet media ambitions.
The deal with Apollo Global Management also includes the entire Verizon Media unit, including the advertising technology operations for the two brands.
The company said in a statement that Verizon will retain a 10 percent stake in the company, which will be known as Yahoo in the future and will continue to be led by CEO Guru Joraban.
Verizon acquired Yahoo in 2017 for about $ 4.5 billion, ending the race for one of the longest running internet brands. Yahoo has merged in its division with AOL, another star of the early internet era, which Verizon acquired in 2015.
Both AOL and Yahoo lost their momentum – and high market ratings – as internet users switched to newer platforms like Google and Facebook.
Verizon has been looking for synergies from Yahoo’s massive online presence and its other media operations including the recently sold news sites TechCrunch and Huffington Post.
With Google and Facebook controlling the online ecosystem, Roger Kay, an analyst at Endpoint Technologies Associates, said, “Yahoo hasn’t done things well and Verizon hasn’t been able to do much with it.”
“Yahoo was a fully formed entity with its technology, and Verizon couldn’t turn a bird into a fish.”
Kai said it would still be difficult to break the “oligopoly” in advertising technology for Google and Facebook, and that the possibilities are uncertain for the new Yahoo.
“It may be (Apollo) will try to extract something and put it back on the market,” Kay said.
Verizon and Apollo executives said they saw opportunities for the new Yahoo.
“We strongly believe in Yahoo’s growth prospects and the big backwinds driving growth in digital media, advertising technology, and consumer internet platforms,” said David Sampur, senior partner and co-chair of Apollo’s private equity division.
“Apollo has a strong track record of investing in technology and media companies and we look forward to leveraging this experience to help Yahoo continue to thrive.”
Verizon CEO Hans Westberg said the media unit “has done an amazing job at the heart of the business over the past two and a half years and the growth potential is enormous.”
“The next iteration requires full investment and appropriate resources. During the strategic review process, Apollo provided the strongest vision and strategy for the next phase of Verizon Media. I have full confidence that Yahoo will take off in its new home,” added Vistberg.
Apollo has an extensive investment portfolio including real estate, finance and consumer brands. In recent years, it has acquired the Venetian resort in Las Vegas, the Qdoba restaurant chain, and the Fisker electric vehicle company.
Monday’s deal represented the latest change of ownership in AOL, whose massive valuation enabled the leading internet services firm to seal a deal for Time Warner in 2001, which was phased out after eight years.
AOL operated independently, focusing on digital media and news, until Verizon acquired it in 2015 for $ 4.4 billion.