Verizon Communications Inc. had reached an agreement worth $4.8 billion for purchasing Yahoo Inc.’s internet properties, which was to go through in the early half of 2017. However, sources close to the matter have revealed that the deal will be renegotiated and the price will be reduced by nearly $250 million after information came to light about security breaches at the web firm. After the deal, the entity that will remain will be renamed Altaba Inc. instead of Yahoo. The people said that apart from the discount, the entity will share legal responsibilities with Verizon that concern the breaches.
The sources wished to stay anonymous, but said that the announcement of the new agreement would be made in a matter of days or weeks. But, the revised agreement hasn’t been finalized yet and is still subject to change. Based in Sunnyvale, California, Yahoo’s shares had declined earlier, but it managed to erase it by rising to $45.71, an increase of 1.5%. On the other hand, Verizon went down by 0.7%. The revised deal would have to have the approval of shareholders. Analysts said that a price cut was acceptable and it meant that the sale would be made.
In December, Yahoo revealed that back in 2013, cyber thieves had breached their security to access information and had gotten away with dates of birth, scrambled account passwords and email addresses of the users. Criminals could take advantage of this stolen data to access even more personal information of the users online from different sources. The announcement was made after the company had already revealed details about another data breach in 2014 in September in which at least 500 million user accounts had been affected. Last month, Yahoo had asserted that there would be a delay in the sale and it would close in the second quarter of 2017.
It said that the time would be used by the company for assessing the impact of the breaches and for meeting the closing conditions. If the deal has indeed been renegotiated, it is a signal that investigations into the security breaches have been completed. This has remained an important concern for investors. Based in New York, Verizon is purchasing Yahoo because of the billion users it has because it wishes to go beyond a maturing landline and wireless business into advertising and mobile media ventures. In the wake of the hacks, Verizon had been after the discount or a termination of the deal altogether.
Marissa Mayer, the Chief Executive of Yahoo Inc., is under considerable pressure to close the deal. Her failure to turn the company around led to a bidding process in July, which Verizon was able to win. Mayer was in charge of the company when both security breaches occurred. Yahoo had stated that it hadn’t been able to identify the ‘intrusion’ by a third party in August 2013. Forensic experts had actually found out about the event after the company had been warned of a potential breach by law enforcement officials and investigations.