Verizon, Yahoo slash merger deal by $350M over data breaches

Verizon has reached an agreement to cut the price of its takeover deal of Yahoo by $350 million.

The companies said Tuesday that under the new deal, which was initially valued at $4.8 billion, they would share legal and regulatory liabilities stemming from Yahoo’s massive security breaches that came to light in late 2016. The breaches compromised 1.5 billion user accounts.

The move to slash Verizon’s purchase price was long expected.

{mosads}Top Verizon executives in recent weeks had noted that the scale of the record-breaking breaches would have a “material impact” on the deal and suggested a lower merger price. Some analysts had expressed concerns that Verizon could have assumed Yahoo’s liabilities over the data breaches. And reports last week said Verizon was seeking to knock $250 million off its previously agreed upon price.

On Tuesday, Verizon voiced optimism over their deal.

“We have always believed this acquisition makes strategic sense,” said Marni Walden, a Verizon executive vice president, in a statement. “We look forward to moving ahead expeditiously so that we can quickly welcome Yahoo’s tremendous talent and assets into our expanding portfolio in the digital advertising space.”

The Securities and Exchange Commission is currently investigating Yahoo over whether they properly informed investors of the hacks.

The companies on Tuesday said that Yahoo would be responsible for 50 percent of any cash liabilities related to the breach from non-SEC government investigations after the deal is closed. Yahoo is assuming liability for any third party litigation related to the breaches, as well.

Yahoo is also facing pressure from Capitol Hill over the breaches. Earlier this month, Sens. John Thune (R-S.D.), chairman of the Senate Commerce Committee, and Jerry Moran (R-Kan.), chairman of the panel’s consumer protection and data security subcommittee, wrote a letter to Yahoo CEO Marissa Mayer inquiring about the breaches.

In their letter, the senators hammered Yahoo for being “unable to provide answers to many basic questions about the reported breaches” and asked Mayer to clarify several points regarding the breaches and Yahoo’s timeline for notifying customers.

Mayer will step down from Yahoo — which will be renamed Altaba — after the merger is completed.