Finance

Yahoo slashes assets price for Verizon in wake of data breach scandal

Following the shocking announcement made by Yahoo last year that 1.5 billion of its users accounts were hacked on two separate occasions, Yahoo has slashed the price of its core internet business in the sale to US telecom giant Verizon by $350 million. Under the revised terms of the delayed deal, Verizon will now purchase Yahoo’s assets for $4.48 billion.

Yahoo is still in the midst of lawsuits related to the large cyber attacks against its users, which affected more than 1.5 billion people. The company announced in September last year that hackers in 2014 breached the accounts of more than 500 million user accounts stealing personal information. Then in December, Yahoo admitted to another cyber attacks which took place in 2013 affecting more than a billion users.

The terms of the revised sales agreement between Yahoo and Verizon now says that Yahoo will continue to cover the cost of a Securities and Exchange Commission probe into the breaches as well as shareholder lawsuits. However, Verizon will share the cost of government investigations and third-party litigation related to the hacks.

“We have always believed this acquisition makes strategic sense,” said Verizon executive vice president Marni Walden. “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.”

Verizon is purchasing Yahoo’s main operating business which is a way for the dwindling internet company to separate from its more valuable stake in Chinese internet e-commerce giant Alibaba, in which it will become a new entity, renamed Altaba, Inc., and will act as an investment company. Yahoo’s deal with Verizon is expected to close by July, ending Yahoo’s more than 20 years as an independent company.

Following the massive hacks against its users, Yahoo is said to be ramping up security. Yahoo’s current CEO Marissa Meyer said last month that “approximately 90 percent of our daily active users have already taken or do not need to take remedial action to protect their accounts, and we’re aggressively continuing to drive this number up.”

The SEC has reportedly opened an investigation as to whether Yahoo should have informed investors sooner about the massive data attacks. The company boasted over a billion users in 2016, with more than 650 million of those people connecting from mobile devices. According to US law, companies that fall victim to large data hacks must disclose them as soon as they are deemed to affect stock prices.