Verizon is exiting the digital shopping platform space.
The communications technology giant has reached an agreement to sell its Verizon Media subsidiary to private equity firm Apollo Global Management for $5 billion. Verizon will retain a 10% stake in the company, which will be known as Yahoo at close of the transaction and continue to be led by CEO Guru Gowrappan.
Verizon Media is comprised of brands including Yahoo and AOL, including the Yahoo Shopping deal discovery platform Yahoo Shops and youth-oriented, cross-channel “In The Know” shopping network. Verizon Media had also been in the process of developing an online marketplace known as Yahoo Shops, which would include leading-edge technology such as augmented reality (AR) try-on tools, a 3D product catalog, and a virtual 3D dressing room. It is unclear if or how the acquisition will affect the planned rollout of Yahoo Shops.
Other recent digital retail activities undertaken by Verizon Media include an interactive shopping-based holiday promotion across its unified commerce content platforms, a joint interactive holiday campaign with Walmart, and a “Groceries from Walmart” partnership allowing Yahoo Mail users to browse, add to cart, and buy essential groceries from Walmart within Yahoo Mail.
“We are excited to be joining forces with Apollo,” said Guru Gowrappan, CEO, Verizon Media. “The past two quarters of double-digit growth have demonstrated our ability to transform our media ecosystem. 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.”
Under the terms of the agreement, Verizon will receive $4.25 billion in cash, preferred interests of $750 million and retain a 10% stake in Verizon Media. The transaction includes the assets of Verizon Media, including its brands and businesses. The transaction is subject to satisfaction of certain closing conditions and expected to close in the second half of 2021.
Goldman Sachs served as lead financial advisor to Verizon in the transaction. Evercore also served as financial advisor to Verizon. Kirkland & Ellis LLP and Freshfields Bruckhaus Deringer LLP are serving as legal counsel to Verizon. LionTree served as lead financial advisor to and will invest alongside the Apollo Funds.
RBC Capital Markets also served as financial advisor to the Apollo Funds in connection with the transaction, alongside Barclays, BMO Capital Markets Corp., Deutsche Bank and Mizuho Securities USA LLC; all are also providing financing for the transaction. Mizuho Securities USA LLC also served as lead structuring advisor to the Apollo Funds. Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal counsel to the Apollo Funds.