Apollo Global Expands Portfolio, Buys Verizon Media for $5B
Private equity fund Apollo Global Management is set to expand its presence in the content and advertising space after agreeing to acquire AOL and Yahoo brands from Verizon.
“Apollo delivered the strongest vision and strategy for the next phase of Verizon Media. I have full confidence that Yahoo will take off in its new home.”
Hans Vestberg, CEO, Verizon
Yahoo and AOL Switch Hands Again
The $5 billion deal was announced by Verizon on Monday, confirming the company’s intent to offload the Verizon Media for almost half the amount it paid to acquire both brands: AOL for $4.4 billion in 2015 and Yahoo for $4.5 billion in 2017.
Verizon acquired the brands to create synergy, expand on their global reach and compete with internet giants Google and Facebook for advertising money, but after hopes for growth in revenue did not materialize, the telecom had to write down assets in 2018 and implement several rounds of layoffs.
Following the exit of ex-AOL CEO Tim Armstrong in the fall of 2018 and under the new CEO Guru Gowrappan, Verizon Media offloaded some of the assets of AOL and Yahoo, including Tumblr, Flickr, Moviefone and HuffPost, to focus on content on news, sports, finance and lifestyle, as well as the Yahoo Mail platform.
Positioned to Capitalize on Market Opportunities
These strategic sales allowed the media business to consolidate, but it was not until the first quarter of 2021 before Verizon Media posted growth fueled by advertising revenue. CEO Gowrappan is set to keep its position after the completion of the deal with Apollo, which will see the new business take the name of one of the brands, Yahoo, while Verizon will retain a 10% stake.
“We are excited to be joining forces with Apollo. 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.”
Guru Gowrappan, CEO, Verizon Media
Under the terms of the deal expected to close in the second half of 2021, subject to certain closing conditions, Apollo will pay $4.25 billion in cash and $750 million in preferred stock in the new company for a 90% stake of the media business.
“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. 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.”
David Sambur, Senior Partner and Co-Head, Apollo Global Management
The deal agreed with the telecom falls into the category of high-profile acquisitions Apollo Global Management got involved with recently, among which the deal to acquire from Las Vegas Sands the subsidiaries which run the company’s Las Vegas casino business in March for $1.05 billion in cash and $1.2 billion in seller financing in the form of a loan credit and security agreement, in a combined deal with VICI Properties which bought the real estate assets of LVS for $4 billion.
Prior to that, Apollo, which failed with an offer to buy William Hill, entered into a definitive agreement to acquire outstanding stock from Great Canadian Gaming in a deal valued at $1.9 billion.
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