Read the attached articles about Verizon's acquisition of Yahoo. Utilizing your knowledge of external and internal analysis, business and corporate strategy, and corporate governance, please discuss the following questions: 1 What is the corporate strategy behind the Verizon's acquisition of Yahoo? 2 Why did Yahoo agree to be acquired by Verizon? Discuss the benefits and challenges they face with the acquisition. Is this a good deal for Yahoo? 3 Why did Verizon decide to acquire Yahoo? Discuss the benefits and challenges they face with the acquisition. Is this a good deal for Verizon? 4 How would the acquisition affect Yahoo's business strategy? 5 What was the role of corporate governance in this deal? Good Luck! Yahoo sold to US telecoms giant Verizon (BBC, 25 July 2016) US internet firm Yahoo is being acquired by American telecoms giant Verizon Communications for nearly $5bn (3.8bn) in cash. Yahoo will be combined with AOL, another faded internet star, which Verizon bought last year. The deal does not include Yahoo's valuable stake in Chinese firm Alibaba. The price tag for the deal is well below the $44bn Microsoft offered for Yahoo in 2008 or the $125bn it was worth during the dot.com boom. 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 Timeline 1994 Yahoo - which stands for Yet Another Hierarchically Organized Oracle - is founded 2000 Yahoo valued at $125bn at height of dot.com boom 2002 Google rejects a $3bn bid from Yahoo 2008 Microsoft's $44.6bn offer for Yahoo is turned down 2013 Blogging site Tumblr acquired by Yahoo for $1.1bn 2015 Yahoo makes net loss of $4.4bn 2016 Verizon agrees $4.8bn deal to buy Yahoo Marissa Mayer, chief executive of Yahoo, 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, Ms 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. "That's the big openended question: what are they going to do with the brands?" said Michael Goodman, a director at Strategy Analytics. Analysis: New York business correspondent Michelle Fleury While this is a sad day for Yahoo as big as Facebook and Google in its prime it raises interesting questions about its new owner. What are Verizon's ambitions? Beyond the talk of becoming a global media company, Verizon chief executive Lowell McAdams wants a larger share of the booming digital advertising pie. And he thinks this deal will help him. As a leading US mobile phone network, Verizon already had a wealth of data from smartphone users that it could mine. Its purchase of AOL a year ago for its programmatic advertising technology allowed it to leverage that more effectively. Yahoo, meanwhile, has struggled to build its mobile advertising business. Its appeal is that it has content. With Yahoo, Verizon gains the internet company's 600 million monthly active mobile users, as well as its email service, Yahoo Finance, and Tumblr, which is popular among millennials. So is Verizon ready to take on the likes of Google and Facebook? In 2015, these two tech behemoths claimed the largest share of the digital ad market. Whether or not Verizon can challenge that remains to be seen but that's certainly the idea. Brands 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. Ms Mayer, who took the helm at Yahoo in 2012, has made little progress in returning the company to profit. Last week the firm reported a $440m loss in the second quarter, but said the board had made "great progress on strategic alternatives". Verizon Finalizes $4.8 Billion Yahoo Deal Verizon plans to announce deal early Monday, ending months of speculation By RYAN KNUTSON and DEEPA SEETHARAMAN Updated July 24, 2016 7:55 p.m. ET (WSJ) Verizon Communications Inc. has agreed to pay $4.8 billion to acquire Yahoo Inc., according to a person familiar with the matter, ending a drawnout auction process for the beleaguered internet company. The price tag, which includes Yahoo's core internet business and some real estate, is a remarkable fall for the Silicon Valley web pioneer that once had a market capitalization of more than $125 billion at the height of the dotcom boom. For New Yorkbased Verizon, the deal simply adds another piece to the digital media and advertising business it is trying to build. The deal is expected to be announced early Monday. The news was earlier reported by Recode and Bloomberg. Verizon plans to keep the Yahoo brand, according to a person familiar with its plans. Yahoo's chief executive, Marissa Mayer, is unlikely to have a prominent roleif anyunder Verizon, people familiar with the matter said. She stands to make more than $50 million in compensation if she is terminated as a result of the sale, after earning over $100 million in cash and equity. When the bidding began in April, Verizon was the immediate frontrunner with a market capitalization of roughly $228 billion and a plan for how to plug Yahoo into its upstart digital media business, which includes AOL properties it acquired last year for $4.4 billion. Verizon's competition came primarily from privateequity firms such as Bain Capital, Vista Equity Partners, TPG and Advent International Inc., as well as a group led by Quicken Loans founderDan Gilbert. AT&T Inc. joined the bidding process later, but it wasn't seen as a serious contender, people familiar with the matter said. Verizon in June submitted a bid of $3 billion, but that didn't include Yahoo's real estate and came before last week's final round of bidding. Verizon is building a portfolio of online content and aiming to monetize it via advertising. Its current assets include Huffington Post and TechCrunch, which it acquired in last year's AOL deal, and its own mobile video app, called go90. Acquiring Yahoo will bring in millions more viewers from Yahoo sites like Finance, Sports and News. Verizon also hopes to plug data derived from smartphones into AOL, and now Yahoo's, digital advertising systems, and it is aiming to build a competitor to online advertising giantsFacebook Inc. andAlphabet Inc.'s Google. But a combined Yahoo and AOL would be far outpaced by its now farlarger rivals. Google and Facebook will account for more than half of the $69 billion U.S. digital ad market this year, according to estimates by data firm eMarketer. Yahoo's share is expected to be 3.4%; Verizon properties including AOL hold an evensmaller 1.8% of the market, according to eMarketer. Yahoo's hold on the market is also slipping. In 2014, Yahoo generated $2.54 billion in revenue from U.S. digital ads. That is expected to be $2.32 billion in 2016, or 8.7% lower, according to eMarketer. \"The headwinds for all large players not named Google and Facebook are very real,\" said Pivotal Research analyst Brian Wieser.\"Noticeable growth only has a chance to come with ongoing investment, whether M&A or internal.\" INTERACTIVE: Yahoo, 1996 2016 Last week, Yahoo said secondquarter revenue, minus commissions paid to partners for web traffic, fell 19%. This marked the sixth decline in the past seven periods and the steepest slump under Ms. Mayer. The Sunnyvale, Calif., company also said display ad prices fell 15% yearoveryear in the second quarter, while search ad prices fell 8%. During a conference call with analysts, executives said video ad prices were under pressure because of an influx of video ad supply and \"uncertainty\" around the Yahoo sale process. Ms. Mayer also struck a different tone. While past calls were focused on growth, Ms. Mayer spent considerable time touting the company's lower cost structure. Yahoo's head count has shrunk about 15% this year to 8,800 employees. \"The pace of cost cutting is significant,\" wrote Bernstein Research analyst Carlos Kirjner in a July 19 note. \"We suspect that there will be a price to be paid in the future for these fast, deep cuts, reflected in lower revenue growth.\" Analysts are divided on the value of Yahoo's core business. The decline in search revenue prompted Credit Suisse to cut its valuation of Yahoo's core business to $7 billion, down from $8 billion. But that is more robust than Mr. Kirjner's estimate of $3.4 billion. The Verizon deal is the first major step toward unwinding Yahoo. Next up is a trove of about 3,000 patents, which Yahoo is selling in a separate auction, that is expected to fetch more than $1 billion. The patents date back to Yahoo's initial public offering in 1996 and cover key areas such as e commerce, online advertising and search, including its original search technology. Yahoo also will need to figure out what to do with its stakes in Yahoo Japan Corp., majority owned by SoftBank Group Corp., and Chinese ecommerce company Alibaba Group Holding Ltd., considered to make up the majority of Yahoo's roughly $36 billion market value today. Verizon to End Yahoo Survival Fight With $4.8 Billion Deal Alex Sherman sherman4949 Matthew Townsend matt_townsend Bloomberg, July 24, 2016 11:15 AM CDT On Monday, Yahoo! Inc.'s years-long fight to survive as a standalone company will draw to a close. Verizon Communications Inc. will announce plans to buy Yahoo's core assets for a bit more than $4.8 billion before the market opens, said two people with direct knowledge of the situation who asked not to be identified because the information isn't public. The deal includes Yahoo real estate assets, while some intellectual property is to be sold separately, the people said. Yahoo will be left with its stakes in Alibaba Group Holding Ltd. and Yahoo Japan Corp., with a combined market value of about $40 billion. A transaction stands to finally seal the fate of web pioneer Yahoo after months of speculation and pressure from investors including Starboard Value LP. The deal will add the company and its millions of daily users to Verizon's growing stable of media properties and is also likely to end the reign of Yahoo Chief Executive Officer Marissa Mayer, who tried and failed to re-invent Yahoo as an independent company. Verizon spokesman Bob Varettoni and Yahoo spokeswoman Rebecca Neufeld declined to comment. Yahoo hasn't laid out plans for its investments in Alibaba and Yahoo Japan. 'Strategy Shift' With its core wireless business maturing, Verizon is expected to keep Yahoo mostly intact to compete with Alphabet Inc.'s Google and Facebook Inc. in digital ads by tapping into users on sites like Yahoo Finance. The takeover will double the size of Verizon's digital advertising, placing it as a distant third behind Google and Facebook in the $187 billion market. \"The deal speaks to a clear strategy shift at Verizon,\" Craig Moffett, an analyst with MoffettNathanson, said Sunday. \"They are trying to monetize wireless in an entirely new way. Instead of charging customers for traffic, they are turning to charging advertisers for eyeballs.\" Yahoo gained 1.4 percent to close at $39.38 on Friday after Bloomberg News reported it was closing in on a deal with Verizon. Shares of Verizon advanced 1.3 percent to $56.10. AT&T Inc. and Quicken Loans Inc. founder Dan Gilbert, as well as firms Vector Capital Management and TPG, were also active in bidding for Yahoo. The deal comes about two years after Starboard began campaigning for changes at Yahoo. In September 2014, it pushed Mayer, who was a little over two years into leading a turnaround, to merge with AOL Inc. She didn't oblige. In February, facing continued pressure, the company said it was considering a sale. Close all those tabs. Open this email. Get Bloomberg's daily newsletter. Sign Up In some ways, a takeover of Yahoo by Verizon would finally give Starboard what it wanted because the telecom giant acquired AOL last year. Back then, Starboard saw combining the two flailing Web portals as a way to cut $1 billion in costs. AOL's advertising technology, which has improved under CEO Tim Armstrong, can now better leverage Yahoo's \"reasonably strong\" content for mobile devices, Moffett said. \"Verizon is hoping that combining Yahoo's content with AOL's ad technology platform and Verizon's own insights into user data can make the advertising inventory much more valuable,\" he said. The activist crusade may also cost Mayer her job. Her arrival was met with great fanfare when she was lured away from Google in 2012. While she made progress on some products such as Yahoo's e-mail and media, overall sales growth remained sluggish. A failed attempt to spin off the company's Alibaba stake, now worth about $32 billion, hurt Mayer's standing with investors. The plan was scuttled to avoid a potentially large tax burden. Yahoo CEO Marissa Mayer downplayed the biggest threat facing the company, and it could end up getting her fired Eugene Kim Mar. 26, 2016, 10:23 Business Insider Yahoo CEO Marissa Mayer downplayed the threat posed by activist investors for more than a year, dismissing the danger as a noisy distraction and setting the stage for a showdown that could now cost Mayer her job. The fight between Mayer and activist investor Starboard Value took a dramatic turn on Thursday when Starboard publicly floated a plan to replace Yahoo's entire board of directors with its own people a brazen move that would effectively hand control of the internet company to Starboard. According to some Yahoo insiders, Mayer's recognition and efforts to quell the outside threat came far too late. "She viewed [Starboard] as a 'bit player' because they owned such a small percentage, that this was a standard ploy for them to garner PR and attention," one person familiar with the matter recounted of Mayer's attitude to Starboard's initial criticisms in 2014. "She did not take them seriously, when it first arose." With Yahoo now under siege by Wall Street activists for the third time in eight years, the company finds itself in an all-toofamiliar situation. And for Mayer, who was herself hired as CEO by the previous activist investorto gain influence at Yahoo, the showdown reflects an almost poetic culmination to an ambitious and still inconclusive Silicon Valley comeback story. Small stake, small threat There's no telling if Starboard will prevail in a looming proxy fight with Yahoo. But the hedge fund has achieved a fearsome reputation for its aggressive tactics, best exemplified by its success ousting the entire board of the Olive Garden restaurant chain's parent company in 2014. "They'll rip your face off," says one industry insider. Even so, there were no alarm bells ringing at Yahoo when the struggling internet company landed in Starboard's sights a couple of years ago. When Starboard sent its first letter to Yahoo in 2014, the hedge fund had an even smaller stake than the 1.7% ownership it has in the company now. And despite making bold demands, like a merger between Yahoo and AOL, at the time, Starboard faded away and went quiet for a while, emboldening Mayer to believe she had regained the support of the broader investment community, a person close to management said. The message within the Yahoo senior ranks and to rest of the company was that Starboard was not a serious threat. At an all-hands meeting held a few months ago, Mayer and her team seemed to downplay Starboard's impact, given its small stake in the company, and told employees that the negative press reports were all part of the activist investor's PR scheme to create "noise," according to a current employee. Yahoo declined to comment. Starboard did not return a request for comment. Changed attitude Mayer started to take Starboard more seriously in recent months, after the activist investor resurfaced. In November, Starboard called for Yahoo to abandon the sale of its stake in Chinese ecommerce company Alibaba and to focus instead on the sale of Yahoo's core internet business. A month later, Mayer scrapped the Alibaba spin-off plan, and last month, announced Yahoo would field offers for its core business. Still, Mayer remained confident in her plan to turn the company around and didn't always address the activist issue in company meetings, according to another former employee. "She was dismissive of any questions from employees about this at company meetings," this person said. Given the challenges facing Yahoo's business, Mayer's decision to keep employees focused on the turnaround mission rather than spreading fear among the rank-and-file was not unreasonable, say some defenders. Mayer's main priority was taking on Google and Facebook, and reversing Yahoo's stagnant revenue growth and shrinking market share. Indeed, this passion has instilled a sense of confidence in some Yahoo employees. Another Yahoo insider has told Business Insider that some on the team still believe in Mayer and Yahoo, and are not worried about the activist threat. Some employees feel like the company has survived similar storms in the past and business will eventually go back to normal. But the failure to take the activist threat seriously was deeper than just the message to employees. Some executives urged her to pay more attention to shareholder demands, but Mayer insisted on staying laser-focused on product development, one of the people said. "She believed that Yahoo was competing with Google and Facebook," this person said. "She was so passionate about the product, and it created a layer of disbelief she had that anyone would question her." Blind confidence Yahoo's recent moves suggest the company may feel confident about its chances in a proxy fight against Starboard. On the day that Yahoo and Starboard were scheduled to meet for the first time earlier this month, Yahoo announced two new board members, without consulting Starboard, a move that many perceived as a sign that Yahoo was preparing for a fight. Yahoo is also reportedly frustrating potential buyers by dragging its feet in any potential talks. Yahoo has made non-industry-standard, long nondisclosure agreements, keeping potential buyers on hold, according to another source. "While the business rationale for making such a move on the eve of the meeting with Starboard remains unclear, we believe it likely signifies that Yahoo has already been gearing up for a proxy contest," SunTrust analyst Bob Peck wrote in a note, referring to Yahoo's move to hire two new board members right before meeting Starboard. There's still a chance that Yahoo and Starboard could reach a settlement and not go all the way to a proxy fight. And even if they do, there's no guarantee that Starboard will win. Although Starboard has replaced the entire board of Darden (which owns Olive Garden), full board takeovers are typically extremely difficult, especially for a company of Yahoo's size, nearly four times bigger than Darden's. Regardless, Mayer's unwillingness to work more closely with activist investors has resulted in rising tension and the prospect of a bruising proxy fight, which puts her job on the line. And barring any sudden settlement, it will be the shareholders who decide if she gets to stay at the company. "Something's got to change now, quickly," one of the former employees said. "It's just a mess."