Economy Yahoo and AOL sold at a loss by Verizon...

Yahoo and AOL sold at a loss by Verizon to the Apollo fund

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648x415 logos yahoo aol illustration

Yahoo and AOL logos (illustration). – AFP

We call it a bad deal. With a flair worthy of Vivendi at the time of Jean-Marie Messier, the American telecoms giant Verizon had bought AOL then Yahoo in 2015 and 2017 for $ 9 billion, hoping to boost its presence in the media and especially on online advertising. But faced with the Google-Facebook duopoly, Verizon is throwing in the towel, with the resale of its media division to the Apollo Global Management fund announced Monday for $ 5 billion.

Under the terms of the transaction, detailed in a Verizon press release, the group will receive from the Apollo investment fund $ 4.25 billion in cash, and $ 750 million in preferred securities. Verizon will retain a 10% stake in the new entity, called “Yahoo”, and Guru Gowrappan will remain at the helm when the transaction is completed, expected in the second half of the year.

98% drop in valuation

“With Apollo’s industry expertise and strategic vision, Yahoo will be well positioned to take advantage of market opportunities,” Verizon said in the statement. Yahoo was valued up to $ 125 billion in 2000. AOL had for its part experienced a merger at $ 112 billion in 2000 with Time Warner before being sold to Verizon. So that’s a staggering drop in their combined value of 98% in 20 years.

Verizon has not had the success hoped for in its media branch and in particular had to provision at the end of 2018 a loss of 4.9 billion dollars, including 4.6 billion for this branch alone, and to reduce its workforce. In question, not enough economies of scale, increased competition having caused losses of market share and strong pressure on advertising revenues against other Internet giants. At the same time, Verizon announced drastic cuts in the workforce due to a strategic reorganization for the deployment of 5G technology.

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