Verizon will retain a 10% stake in the company and it will be renamed only Yahoo.
The sale will see online media brands under the old Yahoo and AOL umbrellas like TechCrunch, Yahoo Finance, and Engadget go to Apollo at much lower valuations than they commanded just a few years ago. Verizon bought AOL for $ 4.4 billion in 2015 and Yahoo two years later for $ 4.5 billion.
Verizon will receive $ 4.25 billion in cash from the sale along with its 10% stake in the company. Verizon and Apollo have said they expect the deal to close in the second half of 2021.
Recently, it has become increasingly clear that Verizon wants to sell its multimedia properties and instead focus on its wireless networks and other ISP businesses. Last year, Verizon sold HuffPost to BuzzFeed. It also recently sold or closed other media properties such as Tumblr and Yahoo Answers.
Previously, Verizon’s original vision was to turn Yahoo and AOL properties into online media giants that could take the dominance of Google and Facebook in online advertising. Under former AOL CEO Tim Armstrong, the Yahoo and AOL brands were merged into a new online media division within Verizon called Oath.
But the Oath project was largely unsuccessful in gaining momentum and Armstrong left the company in 2018. Oath again renamed Verizon Media Group in November 2018 and was led by Guru Gowrappan. Gowrappan will continue to run Yahoo under Apollo.
With the sale of Yahoo and AOL, Verizon has indicated that it is no longer interested in the media, unlike its rivals. AT&T is still trying to make WarnerMedia a streaming competitor for Netflix and Disney, even as it grapples with many debts resulting from its media acquisitions. Comcast, another ISP, is still in the media business with NBCUniversal.
Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC.