According to numerous sources, the proposed takeover of Yahoo! Inc. (NASDAQ:YHOO) by Verizon Communications Inc. (NYSE:VZ) has hit another rough patch over Yahoo’s latest email hacking scandal. The whole deal could be in jeopardy.
The two companies first agreed to a deal in July for $4.83 billion, which included the sale of Yahoo’s web assets. It would not include the company’s stake in Alibaba, the giant Chinese online retailer.
Since then, it’s been almost all bad news for Yahoo. The company has been hit by two separate hacking scandals, with internal estimates that a billion different email addresses may have been compromised.
One of two possibilities are currently being floated. Verizon could be asking for a lower price or it may be trying to kill the deal altogether. Verizon’s legal experts are weighing both options.
One thing the deal has going for it is Verizon is still on the hunt for digital advertising companies. It wants to keep expanding in that part of the market. Facebook and Google dominate it, and they’re not acquisition targets. After Yahoo the pickings are much slimmer. Thus, the deal still makes sense and could still happen even at a lower price.
But at the same time, Yahoo’s brand has taken a huge hit from these scandals. It’s easy to see why Verizon would want nothing to do with it. At this point, Yahoo has almost become a punchline.
Yahoo shares fell as much as 6.5% in Thursday’s trading, suggesting investors think the deal will be altered in some way. We just don’t know the details.
