(CelebrityAccess) — Telecom giant Verizon announced plans to sell off its Verizon Media content division, including internet brands Yahoo and AOL to private equity investor Apollo Global Management in a deal valued at $5 billion.
Under the terms of the agreement, Verizon will receive $4.25 billion in cash, along with preferred interests of $750 million in exchange for the assets of Verizon Media, including its brands and business.
While selling a majority of their content company, Verizon will retain a 10% stake in the company, which will be known as Yahoo at close of the transaction and continue to be led by CEO Guru Gowrappan.
“We are excited to be joining forces with Apollo,” said Guru Gowrappan, CEO, Verizon Media. “The past two quarters of double-digit growth have demonstrated our ability to transform our media ecosystem. With Apollo’s sector expertise and strategic insight, Yahoo will be well positioned to capitalize on market opportunities, media and transaction experience and continue to grow our full stack digital advertising platform. This transition will help to accelerate our growth for the long- term success of the company.”
The deal appears to mark the end of Verizon’s ambitions to become a major content and advertising platform that started in 2015 when they acquired the faded AOL brand for $4.4 billion. Two years later, Verizon acquired the equally hoary Yahoo! for $4.5 billion, combining the two brands as an online media division called Oath, led by former AOL CEO Tim Armstrong.
Oath was intended to challenge the dominance of online advertising platforms Google and Facebook while providing a dedicated content channel for Verizon subscribers.
“If you look forward five years, you’re going to be in a space where there are going to be massive, global-scale networks, and there’s no better partner for us to go forward with than Verizon. It’s really not about selling the company today. It’s about setting up for the next five to 10 years,” Armstrong said when Oath launched.
However, the plan quickly unraveled and just a year later, Verizon parted ways with Armstrong and took a $4.6 billion dollar write-down on Oath, admitting to investors that the brand were worth about $200 million. Oath was renamed to Verizon Media in 2019.
Goldman Sachs served as lead financial advisor to Verizon in the transaction. Evercore also served as financial advisor to Verizon. Kirkland & Ellis LLP and Freshfields Bruckhaus Deringer LLP are serving as legal counsel to Verizon.
The deal is expected to close in the second half of 2021.