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Companies agree to share legal liabilities stemming from major data breaches at Yahoo.
Verizon and Yahoo on Tuesday agreed a $350 million discount on the price that Verizon will pay to acquire Yahoo.
The reduction lowers the value of the deal – originally agreed in July 2016 – to $4.48 billion from $4.83 billion.
Verizon and Yahoo have also agreed to share certain legal and regulatory liabilities arising from the massive data breaches that Yahoo disclosed last year, after the Verizon deal was agreed.
"We have always believed this acquisition makes strategic sense. We look forward to moving ahead expeditiously so that we can quickly welcome Yahoo’s tremendous talent and assets into our expanding portfolio in the digital advertising space," said Marni Walden, president of product innovation and new business at Verizon.
Yahoo fell victim to major cyberattacks that took place before the Verizon deal was struck but weren’t disclosed until afterwards. One attack compromised the personal information of more than 500 million users, while another compromised more than 1 billion users.
The revelations led to widespread speculation that Verizon might push for a discounted price for Yahoo, or that it might walk away from the deal altogether.
Under the amended terms announced on Tuesday, Yahoo will take responsibility for 50% of any cash liabilities incurred following the closure of the transaction, which is expected to happen during the second quarter. These liabilities relate to non-SEC government investigations and third-party litigation connected to the data breaches. Liabilities arising from shareholder lawsuits and SEC investigations will continue to be wholly Yahoo’s responsibility.
Also under the amended terms, the data breaches will not be classed as a ‘Business Material Adverse Effect’; nor will they affect whether certain closing conditions have been met.
"We can now move forward with confidence and certainty," said Yahoo CEO Marissa Mayer. "We have a terrific, loyal, experienced team at Yahoo. I’m incredibly proud of our team’s strong product and financial execution in 2016, setting the stage for a successful integration."
Once the deal closes, what’s left of Yahoo will be renamed ‘Altaba’, and it will operate as an investment company.
