Verizon: Yahoo! Data Breach Could Significantly Impact Acquisition Plans
Back in July, Verizon went public with its plan to acquire Yahoo! in one of the larger tech acquisitions in recent memory. The announced $4.83 million deal would give the wireless communications giant access to 25 media and advertising brands as well as an email service with more than 25 million users, and more than 1 billion total monthly search users. The move also represented Verizon’s continued efforts to gobble up online media companies (see: AOL).
All of this, though, was prior to news breaking last month that hackers made their way behind Yahoo!’s walls and stole data on some 500 million users back in 2014. To date, that would represent the largest single hack of a private company. Ever.
And that, for obvious reasons, was enough to give Verizon some pause.
Earlier this month, they already signaled that they would ask for a steep discount on the initial price. And now, Verizon may look to go back to square one and reopen the sale talks.
“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,” Craig Silliman, Verizon’s general counsel, told reporters in Washington, via the New York Times. “If they believe that it’s not, then they’ll need to show us that.”
It was originally believed that the deal would be closed sometime during the first quarter of 2017, but all of that is now contingent on the companies coming together and determining if they ought to proceed. According to Silliman, that burden rests on Yahoo! being able to prove to Verizon that the data breach shouldn’t be looked at as an event that had “material, adverse effect” on the company’s value. A Yahoo! spokesperson said in a statement via Politico that the company remains confident in its overall value.
As far as value in terms of dollars and cents is concerned, I can’t really speak to that. What I do know—as an individual who still (for some reason I can’t seem to comprehend) holds onto a Yahoo! account—is that the impact on their reputation is a significant one. It is definitely possible that they will rebound—people still shop at Target and Home Depot, right?—but the immediate impact is sure to be costly. And this is for a company that was already taking a plunge.
I suspect that Verizon won’t completely abandon its effort to scoop the search company up. But this now presents them with an enormous opportunity to bring them into the fold, but at a steep discount that will save a them few truckloads of money.