Verizon, Yahoo Slash Original Acquisition Price Tag By $350M

Following reports last week suggesting that Verizon was seeking a discount for its $4.83 billion purchase of Yahoo, the two companies on Tuesday confirmed that each has agreed to a $350 million price cut, shaving the value of the deal to $4.48 billion.

The renegotiated deal comes in the wake of the two massive security breaches on Yahoo's network that came to light after Verizon agreed to buy the ailing Internet giant's assets. The two hacks, which took place in 2013 and 2014, impacted more than 1.5 billion user accounts combined, with the 2013 attack being called the largest hack to date, according to security analysts.

Under the terms of the amended deal, Verizon and Yahoo will split cash liabilities related to government investigations related to the breaches. Liabilities arising from shareholder lawsuits and investigations by the Securities and Exchange Commission (SEC) will continue to be the responsibility of Yahoo, the companies said.

[Related: Report: Verizon Renegotiating Yahoo Deal, Seeks $250M Discount]

Sponsored post

Sunnyvale, Calif.-based Yahoo confirmed the 2014 cyberattack that impacted more than 500 million users in September, while the 2013 attack that compromised more than 1 billion user accounts was confirmed in December. Verizon agreed to acquire Yahoo in July, but was not aware of the scope of the hacks before the deal was reached.

Following the news of both attacks, Verizon, based in Basking Ridge, N.J., said that it had been "evaluating the implications of the breaches."

While concerned about the possible consequences of the hacks, Verizon executives never publicly expressed that it was planning to walk away from the Yahoo deal. However, industry analysts and channel partners believed that the telecom giant would be seeking a price cut because of the potential fallout and decreased user engagement as a result of the large-scale hacks.

’We have always believed this acquisition makes strategic sense," Marni Walden, Verizon's executive vice president and president of product innovation and new businesses, said Tuesday in a statement. "We look forward to moving ahead expeditiously so that we can quickly welcome Yahoo’s tremendous talent and assets into our expanding portfolio in the digital advertising space.’

The deal will indeed help Verizon expand past its wireline and wireless business into the mobile content and digital advertising arena. The purchase will give Verizon access to Yahoo's Internet assets, including Yahoo Mail, Flickr, Tumblr, and Yahoo Finance and Yahoo Sports, which reaches a global audience of more than 1 billion users today.

Yahoo said it has been working with the U.S. Federal Trade Commission and the SEC since December when the second attack became known.

Following confirmation of revised acquisition terms, Verizon's stock climbed 27 cents (0.55 percent) to $49.46 Tuesday morning. Yahoo was up 15 cents (0.33 percent) to $45.25.

The deal is still subject to closing adjustments and expected to be wrapped up during the second quarter.