May 4, 2021
Apollo Global Management has agreed to pay about $5 billion to acquire Yahoo and AOL from Verizon Communications, as the wireless company exits its ill-fated foray into the media business, The Wall Street Journal reports.
The private-equity firm, based in New York City, is paying $4.25 billion in cash for a 90% share of the media assets. Verizon, also headquartered in the Big Apple, will keep a 10% stake and $750 million of additional preferred stock in the new company, called Yahoo, that will be formed to operate the business.
The Wall Street Journal earlier had reported the potential sale of Verizon’s media assets to Apollo. Verizon Media—which mostly struggled to grow against Alphabet’s Google as well as Facebook, generated $7 billion in revenue last year.
zon’s positioning of the media business as a complement to its core mobile business—aimed at helping it to add subscribers and reduce the number of people who quit—held it back from pursuing some opportunities to maximize the value of each asset, executives at the private-equity firm said, according to the Journal.
“This is a typical Apollo deal in that these are very iconic, industry leading, businesses, but they need a little tender loving care,” David Sambur, the firm’s co-head of private equity, said in an interview.
Verizon Media’s revenue has increased more than 10% over the past two quarters, helped by rebounding demand from advertisers looking to tap an online shopping boom during the coronavirus pandemic. Digital-ad sales are expected to accelerate in the coming months, as consumers start spending more cash on travel and other activities.
Other suitors previously showed interest in buying off certain pieces of the media
For Apollo, buying the entire portfolio means needing to have a view on how to run each of the diverse properties. The firm specializes in doing such complex deals and has focused on boosting growth at other internet companies it owns, including online-photo-services company Shutterfly.
Verizon Chief Executive Hans Vestberg said in an interview that the company’s long-term strategy to provide “network-as-a-service” to customers over fiber-optic and cellular connections made the media business a better fit under new owners. He portrayed the sale as an outcome years in the making.
Research contact: @WSJ