The last time AOL (bought by Verizon in May 2015) was involved in a mega merger was January 2000, when AOL acquired Time Warner for $182 billion in what was the mega deal of the last tech bubble, creating a $350 billion behemoth... which nearly dragged down both companies a few years later. The timing could not have been more perfect as it marked the tech bubble top...
Will it happen again?
As Bloomberg reports, Verizon Communications will announce plans to buy Yahoo!’s core assets for about $4.8 billion on Monday, a move that would finally seal the fate of the iconic web pioneer after months of speculation and pressure from investors.
News of the takeover is expected to come before the market opens, said a person with direct knowledge of the situation who asked not to be identified because the information isn’t public. The deal includes Yahoo real estate assets, while some intellectual property is to be sold separately, the person said. Yahoo will be left with its stakes in Alibaba and Yahoo Japan, with a combined market value of about $40 billion.
With its core wireless business maturing, Verizon is expected to keep Yahoo mostly intact to compete with Alphabet’s Google and Facebook in digital ads by tapping into users on sites like Yahoo Finance. The takeover will double the size of Verizon’s digital advertising, placing it as a distant third behind Google and Facebook in the $187 billion market.
“The deal speaks to a clear strategy shift at Verizon,” Craig Moffett, an analyst with MoffettNathanson, said Sunday. “They are trying to monetize wireless in an entirely new way. Instead of charging customers for traffic, they are turning to charging advertisers for eyeballs.”
Desperately overpaying for already over-valued assets with market-wide valuations at record levels. What could go wrong?