US telecoms giant Verizon on Monday announced an agreement with Apollo Global Management to sell its media arm for $ 5 billion, including AOL and Yahoo, two former internet elephants who have since fallen out of favor.
Under the terms of the transaction, detailed in a Verizon press release, the group will receive from the Apollo investment fund $ 4.25 billion in cash, and $ 750 million in preferred securities.
Verizon will retain a 10% stake in the new entity, called “Yahoo”, and Guru Gowrappan will remain at the helm when the transaction is completed, expected in the second half of the year.
Yahoo and AOL, two big names in the internet of the 2000s, were acquired for nearly $ 9 billion by Verizon a few years ago, AOL from Time Warner for $ 4.4 billion in 2015, and Yahoo for 4.48 billion dollars in 2017.
But Verizon has not had the success hoped for in its media branch and in particular had to provision at the end of 2018 a loss of 4.9 billion dollars, including 4.6 billion for this branch alone, and to reduce its workforce.
In question, not enough economies of scale, increased competition having caused losses of market share and strong pressure on advertising revenues against other internet giants.
At the same time, Verizon announced drastic cuts in the workforce due to a strategic reorganization for the deployment of 5G technology.
“With Apollo’s industry expertise and strategic vision, Yahoo will be well positioned to take advantage of market opportunities,” Verizon said in the statement.
Yahoo was valued up to $ 125 billion in 2000. AOL had for its part experienced a merger at $ 112 billion in 2000 with Time Warner before being sold to Verizon.
On the stock market, the title Verizon took 0.45% in transactions preceding the opening of Wall Street.