Verizon Saved over $350 Million in Yahoo Purchase
Yahoo rejects $925 million discount request
After months of delays amid haggling, Yahoo eventually agreed to be sold to Verizon (VZ) at a discount of $350.0 million off the original price. Verizon sought a steeper price cut of $925.0 million, but Yahoo didn’t agree to that.
However, a closer look reveals that Verizon’s savings in the Yahoo deal could surpass the $350 million discount allowed. The renegotiated Yahoo buyout deal leaves Altaba to deal with the liabilities arising from Yahoo’s twin data hacks that impacted more than a billion customer accounts. Altaba is Yahoo’s successor, and it will be the holding company of current Yahoo stakes in Alibaba (BABA) and Yahoo Japan.
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Escaping legal bills
US (SPY) regulators including the Federal Trade Commission are investigating Yahoo’s handling of the worst data breach in Internet history. Outside these regulatory probes, several lawsuits seeking damages have been filed against Yahoo as a result of the massive data leak. A 2016 study by IBM (IBM) showed the average cost of dealing with a single data breach incident had risen to $4.0 million from $3.8 million in the prior year.
By letting Altaba deal with the data breach problems, Verizon has saved itself from potentially costly legal issues that might arise from the ongoing investigations.
Besides escaping potential legal bills, the decision to leave Altaba to handle the data breach also means Verizon won’t be distracted by side issues. Verizon is trying to diversify into the media business, and that is the main reason behind it acquiring AOL (AOL) and now Yahoo, and it is at a point where any distraction can ruin its prospects.