Verizon Offload AOL and Yahoo to Apollo, a Private Equity Firm
AOL and Yahoo, which were the largest online services in the 1990s when dial-up preceded broadband, have been bought by the private equity firm Apollo Global Management for $5 billion.
The deal represents the two companies’ failure to adapt and thrive as the consumer internet evolved.
AOL and Yahoo, which have been owned by Verizon since 2015, will now be rebranded as “Yahoo,” said Verizon, which is now expected to focus on its core wireless networks business and other internet provider businesses.
Apollo and Verizon said they expect the sale, which includes online news outlets TechCrunch, Yahoo Finance, Engadget, and others, will close in the second half of 2021.
After acquiring AOL for $4.4 in 2015 and Yahoo for $4.5 billion in 2017, now Verizon is offloading its early Internet pioneers at a significant loss: receiving only $4.25 billion in cash for both media businesses, in addition to a 10% stake in Yahoo.
Partly due to the rise of broadband and the decline of dial-up Internet service, AOL has been in decline since 2001, when it was at the height of its popularity when it purchased the media conglomerate, Time Warner, in the largest merger in U.S. history. However, the COVID-19 pandemic also took its toll on the media empires, by decimating the advertising market and sending revenue for advertising-driven online publications into a sharp decline.
The company, however, has begun its strong recent recovery from last year’s lows,” said Verizon Media CEO Guru Gowrappan, who added that Apollo will help the company grow its “full-stack digital advertising platform.”
“We are big believers in the growth prospects of Yahoo and the macro tailwinds driving growth in digital media, advertising technology, and consumer internet platforms,” David Sambur, co-head of private equity at Apollo, said in a statement. “Apollo has a long track record of investing in technology and media companies and we look forward to drawing on that experience to help Yahoo continue to thrive.”
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