Verizon has officially entered into an agreement to sell its Verizon Media division – including AOL and Yahoo – to Apollo Global Management for $5 billion.
Verizon will receive $4.25 billion in cash, preferred interests of $750 million and retain a 10% stake in Verizon Media. The business will be known as Yahoo at close of the transaction and continue to be led by CEO Guru Gowrappan.
The transaction is expected to close in the second half of 2021.
“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,” said Gowrappan in a statement.
Today’s announcement confirms reports from last week. Verizon paid $9 billion for AOL and Yahoo, and its Media business brought in approximately $7 billion in revenue last year. Edward Jones analyst Dave Heger last week noted that the reported $4 to $5 billion sale price would be less than 1 times revenue, “which is not a big premium by any means.”
Verizon Media has been on a bit of a hot streak lately with multiple double-digit revenue growth quarters. Verizon Media revenues were $1.9 billion in the first quarter, down sequentially from $2.3 billion in the four quarter but up approximately 10.4% year over year. The company attributed the growth to advertising trending up 26% year over year and said revenue from its owned and operated platforms grew 13% year over year. The company’s demand-side platform revenue grew 45% year over year.
Apollo will be taking over several assets within Verizon Media including Yahoo Finance, which CNBC reported was tied to deals several years ago that would have valued it at around $2 billion. The firm is also getting Yahoo Fantasy. at a time when sports interactivity and betting are becoming a big new trend for media companies, and Verizon’s advanced advertising business.