Data breaches really hurt, and Yahoo is reminded of that reality at the negotiating table. Verizon has been renegotiating the acquisition deal with the web company, and it wants a big chunk off the price tag.
The internet company revealed in September that a hack in 2014 affected 500 million users. In December, Yahoo reported another cyberattack that occurred in 2013, and this time, it confirmed that as much as 1 billion users were affected.
Yahoo-Verizon Renegotiated Deal
With the biggest reported cyberattacks in recent memory, Yahoo just cannot dictate the price. Verizon wants a big price cut of $250 million from the original $4.8 billion purchase price, according to Bloomberg.
Another report claims that the discount might be as much as $350 million.
People with knowledge of details of the deal revealed that two companies are close to sealing the deal and that an announcement of the latest agreement might be released within the next days or weeks. However, the terms can still change.
In addition to the big discount, Verizon and the Yahoo entity that will exist following the acquisition will share legal responsibilities linked to the data breaches. Once Verizon seals the deal, Yahoo CEO Marissa Mayer will step down from the board, and the company will be renamed Altaba Inc.
"It looks like they're going to get a price cut — but it's not dramatic. [There is] more certainty around there actually being a sale," said Brett Harriss, an analyst at Gabelli & Co.
Representatives for Yahoo and Verizon did not comment about the report.
Why Verizon Wants To Buy Yahoo
The data breaches are far from being minor slips of Yahoo. CEO Marissa Mayer had her plate full when she joined Yahoo in 2012. While she was able to upgrade the services of Yahoo, money is not just flowing in. Mayer cannot save the internet company from the big mess.
The SEC also has Yahoo under the microscope because of the data breaches. It's another headache for Verizon, but just In case you're wondering why Verizon still insists on buying Yahoo, here's the deal. It wants a bigger audience for its ads. Big spending may spell big profits.
Verizon is not buying the whole of Yahoo but mainly its core businesses including internet assets such as its advertising technology, messenger, Yahoo Mail, and Fantasy Sports.
Buying Yahoo is a similar move to what it did when it acquired AOL for $4.4 billion in 2015. The Yahoo-AOL combo ups the chances of Verizon to compete with advertising giants such as Google and Facebook.
Yahoo just warned users today of a possible third data breach by state-sponsored hackers.
Yahoo might not be able to say Yahoo with this deal, but it is still a good deal. And a lot of things can still happen.