Yahoo has been sold to US telecoms company Verizon for $4.83bn. Verizon will acquire Yahoo's core assets including search, email and instant messaging, along with its advertising technology.
Verizon was the favourite to win despite not being the highest bidder as its business model is closest aligned to that of Yahoo. The other potential buyers were thought more likely to break up the company to realise the value of its assets.
Verizon raised the value of its second-round bid, reported at around $3.5bn for core assets excluding patents and real estate, once it became clear that rival AT&T had joined the race.
Marissa Mayer, CEO of Yahoo, described the deal as the best move for the company in the current climate.
“The sale of our operating business, which effectively separates our Asian asset equity stakes, is an important step in our plan to unlock shareholder value for Yahoo," she said.
"This transaction also sets up a great opportunity for Yahoo to build further distribution and accelerate our work in mobile, video, native advertising and social.”
The market for cable TV is reaching saturation point, and Verizon has looked to online advertising as a way to achieve growth.
The firm bought AOL for $4.4bn last year, and with it the company's mobile video and online advertising technology as well as Huffington Post, Techcrunch, Engadget and other news sites. Verizon is likely to merge Yahoo with these holdings to fill gaps in its current portfolio such as in native advertising and search.
The takeover will double the size of Verizon's digital advertising business, placing it a distant third behind Google and Facebook in the $187bn market, according to Bloomberg.
"The deal speaks to a clear strategy shift at Verizon. They are trying to monetise wireless in an entirely new way. Instead of charging customers for traffic, they are turning to charging advertisers for eyeballs," said Craig Moffett, an analyst at MoffettNathanson.
Verizon with AOL currently holds 1.8 per cent of the $69bn US digital ad market, according to The Wall Street Journal. Yahoo controls about 3.4 per cent, while Google and Facebook combined make up half of the total.
Verizon will still be a long way behind the online and mobile advertising leaders, but buying Yahoo will at least give the company a firm base from which to further expand its market share.
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