Yahoo is an example of just how costly getting hacked can be. Verizon is paying $350 million less for the company than previously agreed upon after renegotiating the deal in the wake of a data breach.
Yahoo’s security breaches are costing the company more than a quarter of a billion dollars. After a previous Bloomberg report claimed that Verizon Communications had negotiated a $250 million discount on the price to acquire Yahoo as a result of the highly publicized hacks that rocked Yahoo late last year, the telecommunications company has made an official announcement about the new deal that reveals the discount is even deeper than reported.
“Under the amended terms, Verizon and Yahoo have agreed to reduce the price Verizon will pay to acquire Yahoo’s operating business by $350 million,” the company said, “In addition, Verizon and Yahoo will share certain legal and regulatory liabilities arising from certain data breaches incurred by Yahoo.”
While a $350 million price drop may seem like a hard pill to swallow, it’s likely better for Yahoo than having Verizon renege on the deal altogether, which briefly seemed like a possibility. Marni Walden, Verizon executive vice president and president of Product Innovation and New Businesses, assured the public of the company’s confidence in the buyout. “We have always believed this acquisition makes strategic sense. We look forward to moving ahead expeditiously so that we can quickly welcome Yahoo’s tremendous talent and assets into our expanding portfolio in the digital advertising space.”
Walden added, “The amended terms of the agreement provide a fair and favorable outcome for shareholders. It provides protections for both sides and delivers a clear path to close the transaction in the second quarter.”
Yahoo has already been forced to deal with a number of hurdles surrounding its imminent sale to Verizon. While the deal was initially announced in July 2016 and was set to close in the first quarter of this year, it’s since been delayed to the second quarter. This, Yahoo says, will give the company time to evaluate the effects of the data breaches and meet closing conditions.
Marissa Mayer, CEO of Yahoo, said in a statement, “We continue to be very excited to join forces with Verizon and AOL. This transaction will accelerate Yahoo’s operating business. especially on mobile, while effectively separating our Asian asset equity stakes. It is an important step to unlock shareholder value for Yahoo, and we can now move forward with confidence and certainty. We have a terrific, loyal, experienced team at Yahoo. I’m incredibly proud of our team’s strong product and financial execution in 2016, setting the stage for a successful integration.”
Verizon hopes that its new acquisition will help it move outside its traditional telecommunications role and into the mobile media and advertising world, while Yahoo simply seems eager for some relief from its many problems.
Article updated on 2-21-2017: Added news that the renegotiated price is $350 million less than originally planned.