Verizon Agrees to Sell AOL and Yahoo For $5.5B; Will Be Known As ‘Yahoo’ In Second Half 2021

CALIFORNIA—On Monday, Verizon (NYSE: VZ) announced that it would be selling media powerhouses AOL and Yahoo for $5 billion to a private-equity firm, Apollo Global Management (NYSE: APO). 

This announcement comes just days after news traveled that Verizon had put AOL and Yahoo up for sale, which comes as a huge advantage to the two media conglomerates. Once the sale is completed, Yahoo and AOL will be merging into “Yahoo,” no longer having the separate media divisions. Verizon, according to the press release, will retain a 10% stake in Yahoo at the end of the sale. Yahoo will continue to be led by Verizon Media CEO Guru Gowrappan.

The Art of the Deal

Millennials who grew up with AOL and Yahoo as their first “real” immersion into the world of media (eventually ‘social media’) have continued to see both Internet providers slowly dissipate, as Google and Facebook have risen to the top, dominating the media market.

Back in 2015, Verizon purchased AOL for $4.4 billion, followed by Yahoo in 2017 for $4.5 billion. Pursuant to the terms of the pending sales agreement, Verizon will receive $4.25 billion in cash with preferred interests of $750 million. The sale includes all of Verizon Media’s assets, including its brands and businesses, subject to the satisfaction of certain closing conditions. 

The sale to Apollo is expected to close in the second half of 2021. “We are big believers in the growth prospects of Yahoo and the macro tailwinds driving growth in digital media, advertising technology and consumer internet platforms,” said David Sambur, Senior Partner and Co-Head of Private Equity at Apollo. “Apollo has a long track record of investing in technology and media companies and we look forward to drawing on that experience to help Yahoo continue to thrive.” 

Verizon Media reported strong, diversified year-over-year revenue growth the past two quarters, driven by innovative ad offerings, consumer ecommerce, subscriptions, betting and strategic partnerships. Yahoo, one of the best recognized digital media brands in the world and the fourth most visited internet property globally, continues to evolve as a key destination for finance and news among Gen Z. This was most recently marked by Yahoo News becoming the fastest growing news organization on TikTok.

Who’s At the Table?

Verizon Media

Financial Advisor:

Goldman Sachs served and will continue to serve as lead financial advisor to Verizon in the transaction, in addition to Evercore serving as a financial advisor to Verizon. 

Legal Counsel:

Kirkland & Ellis LLP and Freshfields Bruckhaus Deringer LLP are serving as legal counsel to Verizon.

Apollo Funds

Financial Advisor:

LionTree served as lead financial advisor to and will invest alongside the Apollo Funds, bringing its global strategic relationships to Yahoo as the company continues to accelerate growth and pursue strategic investments in key verticals and product areas.

RBC Capital Markets also served as financial advisor to the Apollo Funds in connection with the transaction, alongside Barclays, BMO Capital Markets Corp., Deutsche Bank and Mizuho Securities USA LLC. All of the aforementioned companies are also providing financing for the transaction.

Mizuho Securities USA LLC also served as lead structuring advisor to the Apollo Funds.

Legal Counsel:

Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal counsel to the Apollo Funds.

“We are excited to be joining forces with Apollo,” said Guru Gowrappan, CEO, Verizon Media. “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.”

In a statement by Apollo Private Equity Partner, Reed Rayman:

“We are thrilled to help unlock the tremendous potential of Yahoo and its unparalleled collection of brands,” said Rayman said. “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.”

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