There were rumors floating around last year that AOL and Yahoo were considering a merger. Then Verizon went and bought AOL for $4.4 billion instead. Now it looks like AOL and Yahoo will be under one roof after all, because Verizon is spending $4.8 billion to acquire most of Yahoo’s business.
Basically Verizon will handle Yahoo’s content, advertising, and related assets, but the company that will no-longer-be-known-as-Yahoo will retain its shares in Alibaba Group Holdings or Yahoo Japan, Yahoo’s cash, or some oft he company’s intellectual property, described as “non-core patents.”
Once the sale of Yahoo’s core business to Verizon is complete, Verizon will own the Yahoo name and the other company will start calling itself something else and become a new, publicly traded company.
Under Verizon, Yahoo will be “integrated with AOL,” giving Verizon a much bigger digital advertising business as well as control over both of the company’s news, email, online video, and other properties. Whether that will help the combined companies compete more effectively with industry giant Google remains to be seen.
It’s easy to think of Yahoo and AOL as also-rans, but these were once THE big names in the online world. As Forbes points out, there was a time when Yahoo was worth $125 billion… and now it’s being sold off in a deal that values the company at about 4 percent of that amount.