Thursday 16 February 2017 6:35 am

All about the price tag? Yahoo’s price Tumblrs by hundreds of millions as Verizon closes in on a deal

Verizon is close to agreeing a discount of up to $350m (£280m) on its purchase of beleaguered tech giant Yahoo.

The US telecoms giant agreed to pay $4.8bn for Yahoo last year, but has been trying to renegotiate the deal in the wake of two mammoth cyber attacks on the business.

Sources told Reuters an updated deal is close to being finalised, with an announcement potentially coming this week. Meanwhile, Bloomberg sources indicated the price cut could be nearer the $250m mark.

Verizon is hoping to bolt key elements of Yahoo to AOL, a firm it bought in 2015 for $4.4bn. Of particular interest are Yahoo’s advertising capabilities and social media capabilities – such as Tumblr – which Verizon hopes will help to differentiate itself in a US wireless market that is laden with competition.

Hunt for a bargain

A discounted deal was widely anticipated in the wake two huge data breaches in the second half of 2016.

The first cyber attack, in September, compromised as many as 500m Yahoo accounts, and blindsided Verizon who had agreed the deal earlier in the year to buy the firm.

In December, the California-based firm was hacked again, this time with 1bn accounts thought to be accessed in what experts said was the biggest data breach of all time. Yahoo appeared to have learnt its lesson, with Verizon fully briefed prior to an announcement on the matter.

Dave Heger, a equity analyst at Edward Jones told Reuters:

Maybe this isn’t quite as much of a discount as initially thought.

US authorities are investigating the two breaches announced by Yahoo last year.

One key concern is whether it should have disclosed the data breaches earlier, in particular given some of the breaches stretch back to 2013. Reports by the Wall Street Journal indicated this is an area of focus by the US Securities and Exchange Commission.