Verizon announced that it would buy Yahoo’s operating businesses for $4.83 billion.
An acquisition often comes with multiple benefits for shareholders of the acquirer. It can give access to new markets and customers. It can augment existing operations with new businesses. And importantly, it can offer shareholder value-increasing, cost-saving synergies.
“Synergies” can be an unnerving word for employees of both acquirers and acquisition targets because it almost always involves the closing and combining of offices, which also means the reduction of headcount.
“We have enormous respect for what Yahoo (YHOO) has accomplished: this transaction is about unleashing Yahoo’s full potential, building upon our collective synergies, and strengthening and accelerating that growth,” AOL CEO Tim Armstrong said. AOL is a subsidiary of Verizon (VZ).
In an interview with Bloomberg Television following the announcement, Armstrong reiterated this point, noting that there “may be synergies” in the deal.
In the company’s Q2 earnings announcement, Yahoo reported that active headcount stood at 8,800 at the end of the quarter, down from 11,000 a year ago. This is the lowest level in a decade. Analysts have attributed Yahoo’s better-than-expected earnings to such cost-cutting measures.
The management of Verizon and Yahoo offered no additional detail regarding cost synergies.
The deal expected to close in Q1 2017.
Disclaimer: Yahoo is the corporate parent of Yahoo Finance, but Yahoo Finance covers Yahoo as it does any other large public company.