Internet firm Yahoo is to be sold to US
telecoms firm Verizon in a £3.7billion deal that is set to create a new mobile
media giant.
The combined companies are set to have more
than one billion users across more than 25 brands.
Under the deal, Yahoo is set to merge with
AOL - another internet firm bought by Verizon last year for around £3.4bn.
The sale will include Yahoo's e-mail service
and news, finance and sports websites, photo storage site Flickr and its
advertising tools.
Verizon said the agreement would mean
"continued investment and growth" across the companies.
The bulk of Yahoo's current value - shares in
Alibaba Group Holdings and Yahoo Japan, plus a portfolio of patents, will not
be sold and be held by Yahoo - but it will change its name and begin trading as
an investment company.
Lowell McAdam, Verizon's chairman and chief
executive, said: "Just over a year ago we acquired AOL to enhance our strategy
of providing a cross-screen connection for consumers, creators and advertisers.
"The acquisition of Yahoo will put
Verizon in a highly competitive position as a top global mobile media company,
and help accelerate our revenue stream in digital advertising."
The takeover still needs the approval of
Yahoo's shareholders and the green light from regulators.
But assuming it passes, the deal is set to be
completed in the first quarter of next year.
Marissa Mayer, chief executive of Yahoo,
said: "Yahoo is a company that has changed the world, and will continue to
do so through this combination with Verizon and AOL.
"The sale of our operating business,
which effectively separates our Asian asset equity stakes, is an important step
in our plan to unlock shareholder value for Yahoo.
"This transaction also sets up a great
opportunity for Yahoo to build further distribution and accelerate our work in
mobile, video, native advertising and social."
Yahoo has come under pressure from
shareholders angry with a downturn in the company's performance over the past
eight years as it lost out to the likes of Google and Facebook.
Last year, Yahoo suffered a £3.4bn loss.
It's thought the deal with Verizon could end
the four-year reign of Yahoo boss Ms Mayer, a former Google executive who has
failed to turn the company around.
Tim Armstrong, chief executive of AOL, said
the tie-up would help "unleash Yahoo's full potential".
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