Verizon said it will retain a 10% stake in the media divisions, which will be held in a new company called Yahoo, and will received $4.25 billion in cash at the close of the transaction. Another $750 million will be paid as part of a preferred interest stake in the deal.
“Verizon Media has done an incredible job turning the business around over the past two and a half years and the growth potential is enormous,” said CEO Hans Vestberg Verizon. “The next iteration requires full investment and the right resources. During the strategic review process, Apollo delivered the strongest vision and strategy for the next phase of Verizon Media. I have full confidence that Yahoo will take off in its new home.”
Verizon shares were marked 0.8% higher in pre-market trading immediately following news of the sale, indicating an opening bell price of $58.24 each.
Last week, Verizon posted stronger-than-expected first quarter earnings Wednesday and reiterated its full-year profit forecast as rival wireless carriers pared its subscriber base.
Looking into the 2021 financial year, Verizon repeated its forecast for adjusted earnings in the range of $5.00 to $5.15 per share, with capital expenditures pegged between $17.5 billion and $18.5 billion.
Vertberg told investors on a conference call that Verizon media had done "immense" work as part of a multi-year cost-cutting and transformation plan that is starting to bear fruit.
"We see sort of the fruits of that hard work with the growth in two consecutive quarters with double-digit,' Vestberg said. "So, I just want to shout out to the team that this was the plan we set and they are actually delivering on the plan. So, I think we have a great future with these guys.'
"They have clearly a good product portfolio and we know digital is going to be important in the future," he added.