Analysts have given Yahoo's acquisition by US telecommunications giant Verizon the thumbs up, with one saying this could boost Verizon's reach in Europe.
Verizon today announced its acquisition of Yahoo for $4.83bn (£3.7bn) in a move the duo claims creates a "new rival in mobile media technology". It will be integrated with AOL, which Verizon acquired last year.
Verizon CEO Lowell McAdam said: "Just over a year ago we acquired AOL to enhance our strategy of providing a cross-screen connection for consumers, creators and advertisers. The acquisition of Yahoo will put Verizon in a highly competitive position as a top global mobile media company, and help accelerate our revenue stream in digital advertising."
The acquisition comes after Yahoo announced in February that it would be seeking bids for the company and a week after it reported quarterly losses of $440m.
Dale Vile, research director and CEO at Freeform Dynamics, said that the industry has been waiting to see who would buy Yahoo for a while, since it lost a lot of its market share to Google, Facebook and Microsoft.
He said: "Yahoo, in the space it has been working in, it has been almost impossible for it to compete with the big guns like Google, Facebook and to a lesser degree Microsoft. It wasn't possible, in isolation, for Yahoo to recover its position and compete heavily with those players. Any potential was not really realisable; it needed somebody with a bit more scale to come on board."
At its peak, in January 2000, Yahoo was worth more than $125bn.
Vile said the acquisition reflects the fact that telecommunication vendors are "desperate to diversify and drive their businesses in different directions."
He added: "Verizon is actively trying to drive value-add services including various forms of cloud and social media services. Yahoo has a very good subscriber base so that can be a very nice boost in terms of leveraging users that are already committed into services of that kind.
"From an advertising point of view, even though Yahoo has not necessarily been performing in a stellar way, it is an advertising engine. Together with Verizon, particularly pulling that together with mobile advertising and promotion, there is a clear opportunity there to leverage the Yahoo assets."
Rory Duncan, European services research director at 451 Research, agreed that the acquisition reflects Verizon's focus on diversifying into digital platforms. He said that it will probably make the most impact in Verizon's core market, the US, but that it could be an opportunity for the firm in Europe.
He explained: "It will certainly, in the long term, help their bottom line in terms of profitability. But it may take some time. I think it will help Verizon outside their core market, because there are other parts of the world where mobile data usage is a lot higher and more competitive.
"For example Europe, with the UK in particular being the biggest driver of mobile data usage in the continent. There is an opportunity there for content and advertising revenue to be gained from the acquisition of Yahoo."
The sale does not include Yahoo's cash, its shares in Alibaba Group Holdings, its shares in Yahoo Japan, Yahoo's convertible notes, certain minority investments, and Yahoo's non-core patents (called the Excalibur portfolio).
Yahoo CEO Marissa Mayer (pictured) said it was "poetic" for Yahoo to be joining forces with AOL, claiming the duo had popularised the internet, email, search and real-time media.
She added: "Yahoo is a company that has changed the world, and will continue to do so through this combination with Verizon and AOL. The sale of our operating business, which effectively separates our Asian asset equity stakes, is an important step in our plan to unlock shareholder value for Yahoo. This transaction also sets up a great opportunity for Yahoo to build further distribution and accelerate our work in mobile, video, native advertising and social."
Security firm set to become part of acquisitive Shearwater Group
Distributor merges three northern sites into one new hub in Warrington
Activist investor puts forward five director candidates as turmoil continues at security giant
Nima Green asks what is driving public cloud uptake in Germany