Verizon's Yahoo Deal Will Cut 2,100 Jobs -- WSJ

By Ryan Knutson and Deepa Seetharaman Features Dow Jones Newswires

About 2,100 people will lose their jobs at Yahoo and AOL after Verizon Communications Inc. completes its acquisition of Yahoo and combines the two onetime internet rivals, a person familiar with the matter said.

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The coming layoffs, which affect roughly 15% of the roughly 14,000 people in the combined workforce, will occur evenly across AOL and Yahoo to reduce duplication and streamline the organization, the person said. Employees in product and engineering roles will be the least affected, the person said.

Yahoo shareholders approved the $4.5 billion transaction Thursday and it is expected to close on June 13.

Chief Executive Marissa Mayer, who has led Yahoo for the past five years, is widely expected to leave the company after the deal closes but hasn't confirmed her plans. She made no remarks and took no questions during a special meeting held in Santa Clara, Calif., Thursday, a Yahoo spokeswoman said.

Shareholders also approved compensation packages for Ms. Mayer and other executives tied to the deal. Ms. Mayer could reap more than $220 million in connection to the sale, up from the $187 million estimated in April due a rise in Yahoo's share price. Yahoo shares gained 10% to $55.71 on Thursday, following a 13% surge in shares of Alibaba Group Holding Ltd. in which Yahoo still owns a stake.

The Yahoo purchase and the pending layoffs will help bring closure to a drawn-out deal process that has damped morale at the internet pioneer, which commanded a market value of more than $125 billion at the height of the dot-com boom in early 2000.

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Verizon initially agreed in July 2016 to buy Yahoo's core business for $4.83 billion. Then Yahoo disclosed two large security breaches, one in 2014 that hit more than 500 million accounts and another in 2013 that affected more than one billion accounts. The security incidents forced Yahoo back to the negotiating table, and the two sides agreed to lop off $350 million from the price.

AOL CEO Tim Armstrong will lead the combined company under Verizon's new businesses unit, which is overseen by Verizon's Marni Walden. The digital media operation will be known as Oath, but the Yahoo and AOL brands won't go away.

"Consistent with what we have said since the deal was announced, we will be aligning our global organization to the strategy," AOL wrote in a statement. "Oath's strategy is to lead the global brand space. With access to over one billion consumers upon close, we will be positioned to drive one of the most important platforms in the consumer brand space."

The transaction brings Yahoo's core internet business and millions of users from Yahoo sites like Finance, Sports and News into Verizon's expanding portfolio of online content. Verizon's current assets include Huffington Post and TechCrunch, which it acquired in its AOL deal.

Late last year, New York-based AOL laid off several hundred workers to prepare for the merger. Yahoo, which is based in Sunnyvale, Calif., had 8,500 employees as of Dec. 31.

Mr. Armstrong chose his leadership team several weeks ago, and that group has helped determine where the layoffs will occur, the person said. News of the layoffs was earlier reported by technology news site Recode.

Write to Ryan Knutson at ryan.knutson@wsj.com and Deepa Seetharaman at Deepa.Seetharaman@wsj.com

(END) Dow Jones Newswires

June 09, 2017 02:47 ET (06:47 GMT)