Verizon closes $4.5B acquisition of Yahoo, Marissa Mayer resigns [Memo]

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It’s now official. After Yahoo shareholder approval last week, Verizon today announced that it has finally closed its acquisition of Yahoo, which it plans to combine with its AOL assets into a subsidiary called Oath, covering some 50 media brands (including TechCrunch) and 1 billion people globally. It will be led by Tim Armstrong, who was the CEO of AOL before this.

As expected, Marissa Mayer, who had been the CEO of Yahoo and recently received a $23 million ‘golden parachute’ for her work there, has resigned.

“Given the inherent changes to Marissa Mayer’s role with Yahoo resulting from the closing of the transaction, Mayer has chosen to resign from Yahoo. Verizon wishes Mayer well in her future endeavors,” Verizon said in a statement. You can find Marissa in her own words here on Tumblr. TLDR: It’s a long list of the achievements made with her at the helm these last five years, and — alas — you will only read of the struggles that Yahoo went through between the lines.

The deal, nevertheless, brings to a close the independent life of one of the oldest and most iconic internet brands, arguably the one that led and set the pace for search — the cornerstone of doing business on the spaghetti-like internet — at least until Google came along and surpassed Yahoo many times over, and led the company into a number of disastrous and costly attempts to redefine itself, ultimately culminating in the sale we have here today.

The sale of Yahoo is another sign of the massive consolidation that continues to happen in the world of online media and content, as large companies look to bring together multiple audiences for economies of scale to build out stronger advertising businesses in competition with the likes of Google and Facebook.

“The close of this transaction represents a critical step in growing the global scale needed for our digital media company,” said Marni Walden, Verizon president of Media and Telematics (which will include Oath), in a statement. “The combined set of assets across Verizon and Oath, from VR to AI, 5G to IoT, from content partnerships to originals, will create exciting new ways to captivate audiences across the globe.”

Carriers have been an especially interesting player in this regard, as they are looking to offset declines in their legacy businesses. But don’t cry for Verizon just yet: the company employs 161,000 people and made $126 billion in revenues in 2016, with 113.9 million retail connections in its mobile business.

As we wrote last week, there will be cuts of around 15 percent of all staff associated with the acquisition of Yahoo and merger with AOL, around areas like operations and sales and marketing. Today, no word about that in the official announcement although we are asking about this.

Also not specified is who else is departing along with Mayer. As we reported last week, Adam Cahan, who had been an SVP at Yahoo very close to Mayer, was also on his way out, as was Bob Lord, the CISO who was at the head of Yahoo’s security operations when its massive breaches were revealed (although he was not there at the time that they were taking place). That breach resulted in Verizon knocking off several hundred million dollars from its original offer price for the company.

A spokesperson for AOL/Oath declined to comment on specific departures, and provided the following statement about the other redundancies, in line with previous statements:

“Oath’s strategy is to lead the global brand space.  With access to over 1B consumers upon close, we will be positioned to drive one of the most important platforms in the consumer brand space.  Consistent with what we have said since the deal was announced, we will be aligning our global organization to the strategy.”

In the meantime, unsurprisingly, David Filo, Eddy Hartenstein, Richard Hill, Marissa Mayer, Jane Shaw, Jeffrey Smith and Maynard Webb Jr. have already resigned from Yahoo’s board.

“We’re building the future of brands using powerful technology, trusted content and differentiated data. We have dominating consumer brands in news, sports, finance, tech, and entertainment and lifestyle coupled with our market leading advertising technology platforms,” Armstrong said in a statement. “Now that the deal is closed, we are excited to set our focus on being the best company for consumer media, and the best partner to our advertising, content and publisher partners.”

This will include not just media brands but ad tech underpinnning how to leverage these audiences. In this case, the focus in on ONE by AOL and its BrightRoll technology covering mobile, video, search, native and programmatic ads.

An internal memo from Armstrong is below.

Team,

Today is a historic day. We are bringing together some of the most important and scaled brands and products that have revolutionized the way the world works. Our combined services reach over a billion people each month. Building brands people love is our mission and that gives us a billion people to keep building for everyday.

Over the coming years, another 3 billion people will join the revolution with an overwhelming majority being mobile only consumers. With our talent, technology, and brand platforms coupled with Verizon’s strategic mobile position, we will occupy one of the best strategic positions in the global marketplace. The opportunity in front of us is not about the opinions from the pundits and it is not about the competition, it is about our ability to maniacally focus on delivering magical services to mobile enabled consumers.

The companies and platforms in our portfolio have very strong track records of building brands that consumers love. From Yahoo to TechCrunch to AOL to Yahoo Mail to HuffPost to Tumblr to Yahoo Finance to Flurry, consumers and customers across the globe choose our brands everyday to deliver their digital world experiences. Our job is to deliver three simple objectives:

  • Build brands consumers love (also our mission – consumers come first in our objectives)

  • Build platforms customers love

  • Build a company talent loves

Many people across the combined companies have done a tremendous amount of work over the past year. The talent level at the combined companies has been on display in every area of work that has been accomplished in order to get to today. The team from Yahoo, led by Marissa, deserves a special thank you. Yahoo is an incredible brand and talent-based company and we have been impressed with the people, the products, and the spirit.

We want to bring everyone together today to talk about our future together. We are starting a journey together and that journey will be exciting and it will be challenging. Accomplishing our objectives and goals will require adjustments to the company and it will require us to provide clarity on the strategy and the integration objectives. We will start discussing that today.

Let’s make it happen – TA

Edited to remove the names of select executives taking roles in the new organization, as the names have not been publicly confirmed.