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Verizon sells off Yahoo, AOL to private equity firm for $5 billion

By Don Johnson
1/5
Verizon sells off Yahoo, AOL to private equity firm for $5 billion
The Yahoo corporate headquarters are seen in Sunnyvale, Calif. The company was bought by Amazon in 2017. File Photo by Terry Schmitt/UPI | License Photo

May 3 (UPI) -- Verizon has agreed to sell Yahoo and AOL to private equity firm Apollo Global Management for $5 billion, the company announced Monday.

Verizon said it would retain a 10% stake in the business, which will change its name from Verizon Media to Yahoo. The company will continue to be led by Verizon CEO Guru Gowrappan.

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The sale, which is expected to close in the second half of 2021, also includes Verizon's advertising technology business.

Verizon acquired AOL for $4.4 billion in 2015 and Yahoo for $4.5 billion two years later before combining both companies into the subsidiary Oath.

The Yahoo deal was complicated after the media company disclosed two major security breaches that affected more than 1 billion users. Yahoo wound up cutting the price by $350 million and split the cost of any legal liabilities resulting from the breaches.

In buying the companies, Verizon's plan was to compete with Facebook and Google for online advertising, but the strategy hasn't worked very well.

In 2018, Verizon wrote down the value of Oath by $4.6 billion, acknowledging that the move was in part due to "increased competitive and market pressures" that led to lower-than-expected earnings.

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Despite setbacks, Oath has generated revenue, recording $1.9 billion in sales in the first quarter of this year.

"We are excited to be joining forces with Apollo," Gowrappan said in a statement Monday.

"With Apollo's sector expertise and strategic insight, Yahoo will be well positioned to capitalize on market opportunities."

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