Executive Summary

• Telecom carrier Verizon this morning announced a deal to acquire Yahoo’s core Internet business, some intellectual property and real estate. The deal is expected to close in 1Q2017, after which Yahoo will change its name and become a publicly traded investment company.
• The deal excludes a portfolio of about 3,000 non-core patents called the Excalibur portfolio, Yahoo’s 15% stake in Alibaba Group, Yahoo’s cash, its shares and notes from Yahoo Japan and certain minority investments.
• Yahoo serves a global audience of more than 1 billion users, including 600 million monthly mobile users, through its search, communications and digital content products, in addition to 225 million active monthly e-mail users. The Yahoo business will be integrated with Verizon’s AOL business, which was acquired about a year ago, and includes brands The Huffington Post, TechCrunch, Engadget, MAKERS and AOL.com. The combination will result in a total of 25 brands.
• The combined brands will create a distant third in digital-ad revenues, with an estimated 5.2% of total. This trails Facebook and Google, which together are expected to account for more than half of the $69 billion digital-ad market this year, according to eMarketer.