Phone Carrier May Withdraw $4.8-Billion Offer to Buy Yahoo!
After week-long speculation, Verizon Communications Inc. (NYSE:VZ) finally broke the silence on its stance on an explosive revelation by Yahoo! Inc. (NASDAQ:YHOO). Yahoo! revealed that hackers breached its network and compromised confidential data of 500 million e-mail accounts.
Verizon told reporters it has a “reasonable basis” to believe Yahoo’s massive data breach of e-mail accounts is “material” enough that it may allow the phone carrier to withdraw from its $4.83-billion deal to buy the technology company, according to Verizon’s general counsel Craig Silliman, who was cited by various media outlets.
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“I think we have a reasonable basis to believe right now that the impact is material and we’re looking to Yahoo to demonstrate to us the full impact. If they believe that it’s not then they’ll need to show us that,” Silliman said. (Source: “Verizon says Yahoo hack ‘material,’ could affect deal,” Reuters, October 13, 2016.)
Verizon’s take on the future of this deal came after media speculation that the company was looking to renegotiate the price from Yahoo because this data breach had increased the risk of potential litigation from consumers. Verizon wants to set aside a substantial amount to deal with the future uncertainties.
According to a report from The Wall Street Journal, which cited unnamed sources, Verizon was seeking as much a $1.0-billion discount from Yahoo.
Reuters’s report citing Yahoo’s spokesman said the company was “confident in Yahoo’s value,” and it was still working with Verizon to integrate their businesses. (Source: Ibid.)
Silliman said Verizon is “absolutely evaluating (the breach) and will make determinations about whether and how to move forward with the deal based on our evaluation of the materiality.” (Source: Ibid.)
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Yahoo shares fell 1.75% at $41.62, while Verizon stock was little changed at $50.29.
In September, Yahoo disclosed that some “state-sponsored” hackers in 2014 got access to its e-mail users’ names, e-mail addresses, telephone numbers, dates of birth, and encrypted passwords.
If this deal fell apart, it’ll be a big setback for Yahoo. It was looking for a buyer for a long time after years of uncertainty on its future and mismanagement by its executives, who failed to transform the company amid stiff competition.
