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Yahoo’s internet business has been sold to Verizon Communications for nearly $5 billion in cash.

It will be combined with AOL, another faded internet star, which Verizon bought in 2015.

The deal does not include Yahoo’s valuable stake in Chinese firm Alibaba.

The price tag for the deal is well below the $44 billion Microsoft offered for Yahoo in 2008 or the $125 billion it was worth during the dot.com boom.Verizon buys Yahoo

Verizon said the deal for Yahoo’s core internet business, which has more than a billion active users a month, would make it a global mobile media company.

Yahoo CEO Marissa Mayer said: “Yahoo is a company that has changed the world, and will continue to do so through this combination with Verizon and AOL.”

In an email to staff, Marissa Mayer said she was “planning to stay”, adding: “I love Yahoo, and I believe in all of you. It’s important to me to see Yahoo into its next chapter.”

However, the takeover, which is due to be completed in early 2017, raises questions about whether the Yahoo brand could disappear.

AOL chief executive Tim Armstrong said the deal was about “unleashing Yahoo’s full potential”, and creating a major player in mobile media.

Together AOL and Yahoo will have more than 25 brands, including Yahoo Mail, Flickr and Tumblr as well as AOL’s Huffington Post and Techcrunch news sites.

Marissa Mayer, who took the helm at Yahoo in 2012, has made little progress in returning the company to profit.

Last week Yahoo reported a $440 million loss in Q2, but said the board had made “great progress on strategic alternatives”.

 

 

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Verizon has agreed to buy AOL in a deal worth $4.4 billion.

Buying AOL will broaden the amount of advertising Verizon can sell and will increase video production.

AOL owns websites such as the Huffington Post, Techcrunch, Engadget, Makers and AOL.com.

Verizon is trying to become more of a one-stop shop for internet services and entertainment.Verizon buys AOL

AOL, famous for posting compact discs for its services through thousands of letterboxes in the 1990s, still has two million customers for its slower dial-up internet service.

It also became memorable for its messaging service, which would greet users with an audio clip that would cheerfully announce “you’ve got mail!”.

In 2001, during the dotcom stock market bubble, AOL merged with Time Warner in a deal valued at more than $160 billion when it was announced. The deal was unwound in 2009 when AOL was split off into a separate company.

In 2014, AOL had only 0.74% of the $145 billion global digital advertising market, according to eMarketer. Market leader Google had 31.4% market share last year, followed by Facebook with 7.9%.

As well as automated advertising, Verizon said the deal would give impetus to its 4G wireless video and internet video ambitions, and feed into its plans for capitalizing on the so-called “internet of things”.

AOL CEO Tim Armstrong will continue to lead the company if the deal goes through – the transaction is subject to regulatory approval.

“We are excited to work with the team at Verizon to create the next generation of media through mobile and video,” Tim Armstrong said.

Verizon is offering $50 a share for AOL, compared with AOL’s closing price of $42.59 on May 11.

 

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