Verizon announced this week that it will sell its AOL and Yahoo assets to Apollo Global Management, Inc. for $5 billion. Verizon will retain a 10% stake in the company, which will be known as Yahoo when the transaction closes. The deal allows Verizon Media to pursue other growth areas, which it hopes will benefit its employees, advertisers, publishing partners and approximately 900 million monthly active users around the world.
“We are excited to be joining forces with Apollo,” Verizon Media CEO Guru Gowrappan, said in a statement. “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,” added Verizon CEO Hans Vestberg. “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.”
Revenue Growth in the Business
Verizon Media reported diversified year-over-year growth the past two quarters. Innovative ad offerings, consumer ecommerce, subscriptions, betting and strategic partnerships helped drive the growth, according to the company. Meanwhile, Yahoo has become the fourth most visited Internet property in the world and continues to evolve as a key destination for finance and news among Generation Z. Yahoo’s popularity with younger demographics was recently made evident when its news division became the fastest growing news organization on TikTok.
Agreement terms state Verizon will receive $4.25 billion in cash, preferred interests of $750 million, along with its 10% stake in Verizon Media. The transaction is subject to satisfaction of certain closing conditions and should be finalized in the second half of this year. The carrier has not specified how it will use the sale proceeds, but executives have mentioned addressing debt payments, according to The Wall Street Journal. Verizon’s borrowing increased this year after it spent approximately $53 billion to secure wireless spectrum licenses during the Federal Communications Commission’s (FCC) recent auction.
“We are thrilled to help unlock the tremendous potential of Yahoo and its unparalleled collection of brands,” Reed Rayman, Private Equity Partner at Apollo, said in a statement. “We have enormous respect and admiration for the great work and progress that the entire organization has made over the last several years, and we look forward to working with Guru, his talented team, and our partners at Verizon to accelerate Yahoo’s growth in its next chapter.”
Joe Dyton can be reached at firstname.lastname@example.org.