US telecoms giant Verizon has agreed a deal to buy Yahoo for $4.8bn, following talks between the two firms last Friday.
The deal could mean the end of Yahoo CEO Marissa Mayer’s four-year reign, as she is unlikely to join Verizon once the sale is completed.
US search giant Yahoo announced in February that it was looking at “strategic alternatives” for its core internet business.
Over recent years, Yahoo has struggled to keep up with the online transformation of the advertising landscape, and some analysts argue that it has failed to remain relevant in many of its core markets.
Verizon, once it acquires Yahoo, is likely to combine its online business with AOL
“The deal speaks to a clear strategy shift at Verizon”, Craig Moffett, a MoffettNathanson analyst, told Bloomberg. “They are trying to monetise wireless in an entirely new way. Instead of charging customers for traffic, they are turning to charging advertisers for eyeballs.”
Verizon is likely to combine its online business with AOL, which the company bought last year in a $4.4bn deal.
AOL and Yahoo will be competing with leading internet and social media giants such as Facebook and Google, which currently account for over half of the US’ digital ad market, and are the reason behind Yahoo’s struggle to retain profit.
Yahoo, which had a market capitalisation of $125bn in its prime in the year 2000, will still retain its estimated $41bn stake in the Chinese e-commerce company Alibaba.
For an in-depth exploration of how Yahoo fell from its previous heights, see The New Economy‘s special report on the topic.