Verizon Sells Media Group for $5B, Which Includes Yahoo, AOL

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Apollo Global Management, Inc. (NYSE: APO) yesterday announced it has entered into an agreement to acquire Verizon Media for $5 billion. Verizon (NYSE: VZ) will retain a 10 percent stake in the company, which will be known as Yahoo at close of the transaction and continue to be led by CEO Guru Gowrappan.

According to Eric Luebchow of Wells Fargo Securities, the sale is in Verizon’s best interest. Not only can the carrier shed a non-core business, he said, but it gives them $4.25B of cash to help accelerate deleveraging their balance sheet after the C-band auction. “Verizon’s foray into Media was ultimately disappointing,” Luebchow said, “as they spent $9.5B to aggregate AOL and Yahoo, only to write down its value by $4.6B in 2018. VZ was never able to create a formidable competitor to Google and Facebook in digital advertising, while there weren’t any substantive synergies with its core wireless business.”  

Under the terms of the agreement, Verizon will receive $4.25 billion in cash, preferred interests of $750 million and retain a 10 percent stake in Verizon Media. The transaction includes the assets of Verizon Media, including its brands and businesses. The transaction is subject to satisfaction of certain closing conditions and expected to close in the second half of 2021.

“We are excited to be joining forces with Apollo,” said Guru Gowrappan, CEO, Verizon Media. “The past two quarters of double-digit growth have demonstrated our ability to transform our media ecosystem. With Apollo’s sector expertise and strategic insight, Yahoo will be well positioned to capitalize on market opportunities, media and transaction experience and continue to grow our full stack digital advertising platform. This transition will help to accelerate our growth for the long-term success of the company.”

“Verizon Media has done an incredible job turning the business around over the past two and a half years and the growth potential is enormous,” said Hans Vestberg, CEO, Verizon. “The next iteration requires full investment and the right resources. During the strategic review process, Apollo delivered the strongest vision and strategy for the next phase of Verizon Media. I have full confidence that Yahoo will take off in its new home.”

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