Apollo Global Management is set to buy Yahoo and AOL from Verizon Communications for $5 billion.
According to New York Times report, Verizon had said it has given up on its media business and ready to sell off the brands to the private equity firm.
The sale comprises of Verizon’s advertising technology business but with a 10 percent stake in the business to be retained.
Verizon’s Media Chief Executive, Guru Gowrappan, had, in a memo issued to it’s employees on Monday, said: “This next evolution of Yahoo will be the most thrilling yet.”
Reports say Gowrappan will continue to lead Verizon Media following the deal.
The transaction is the latest turn in the history of two of the internet’s earliest pioneers. Yahoo used to be the front page of the internet, cataloging the furious pace of new websites that sprang up in the late 1990s.
AOL was once the service that most people used to get online.
But both were ultimately supplanted by nimbler start-ups, like Google and Facebook, though Yahoo and AOL still publish highly trafficked websites like Yahoo Sports and TechCrunch.
The sale signals the unraveling of a strategy Verizon heralded in 2015 when it acquired the faded internet giant AOL for $4.4 billion.
The purchase was meant to give Verizon a pathway into mobile, with the goal of using AOL’s advertising technology to sell ads against digital content.
Verizon doubled down on that strategy in 2017 with its $4.48 billion acquisition of Yahoo, which it combined with AOL under the umbrella Oath.
But Google and Facebook have proved to be formidable competitors in the digital advertising market.
Verizon acknowledged their might in 2018 when it wrote down the value of Oath by $4.6 billion, attributing the move in part to “increased competitive and market pressures” that had resulted in “lower-than-expected revenues and earnings.”
Still, the business generates plenty of revenue. It recorded $1.9 billion in sales in the first quarter, a 10 percent gain over last year.
For Apollo, it’s an opportunity to further invest in the digital media space, an industry it has already put money behind with deals for Shutterfly, Rackspace and Cox Media. It also has plenty of experience with corporate carve-outs like Verizon’s media business.
Apollo is aiming to propel sales growth with an increased focus on the individual brands that it believes are lost inside a large corporate empire, which could include more premium subscriptions for Yahoo Finance or more sports betting and fantasy leagues as part of its Yahoo Sports business.
Apollo is also notably upbeat about the prospect for digital advertising as it puts more money behind those efforts amid regulatory scrutiny of some of the biggest players, like Google.
And as ads shift from offline to online post-pandemic, Apollo expects the overall industry to grow.
“Does most of that go to Google and Facebook and Snap and Twitter? Of course,” said Reed Rayman, a private equity partner at Apollo. “But, is there still a role for others in the digital media space to benefit from the rising tide, like Yahoo and the other properties? Absolutely.”