Why Verizon Chopped $350 Million Off The Yahoo Deal

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Eric Lieberman Deputy Editor
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Verizon has reportedly agreed to purchase Yahoo after months of uncertainty–but for a discounted price.

The original $4.83 billion deal is being cut by $350 million (roughly 7.24 percent), according to The Wall Street Journal; Yahoo has been hit with multiple, massive breaches.

Yahoo announced in December that one billion user accounts were hacked two years ago, an incident separate from another cyber intrusion where roughly 500 million accounts were breached. It’s believed that both of the cases are the two largest single cyber thefts ever.

Verizon cooled on the Yahoo purchase after the second breach was disclosed and was reportedly considering a price cut or complete exit for the pending $4.83 billion purchase. A team at the telecommunications company wanted to review the hacking incident in order to analyze the damage, ensure it doesn’t also obtain all of Yahoo’s potential legal issues, and see if the valuation was still appropriate, according to Bloomberg. (RELATED: Federal Agency To Investigate Yahoo For Taking So Long To Publicize Massive Hack)

In the time between the latest reports of acquisition and the second massive breach, Verizon wanted updated numbers on user engagement, according to The WSJ. Statistics reflect only a small decline in usage, but as password resets continue the numbers of platform departures could grow.

Technical staff at the two companies met and determined that portions of Yahoo’s systems were so affected by the breaches that it will likely be hard to integrate it into Verizon’s AOL unit, according to The WSJ.

Verizon Chief Executive Lowell McAdam decided that continuing with the acquisition makes sense, albeit not without a reduction in price.

At its peak, Yahoo was valued at $125 billion. It is now being sold for approximately 3.6 percent of what it was once worth, in what Forbes called the “saddest $5 billion deal in tech history.” (RELATED: Marissa Mayer Got $365 Million Contract To Lose Yahoo Billions Of Dollars)

Yahoo seemed to be on the decline for quite some time, but a number of blunders in past year may have sped up the apparent downtrend.

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