Following news of Yahoo's massive data breach, Verizon wants to slash $1 billion off its $4.8 billion Yahoo acquisition deal, New York Post reported, citing several sources.
The Yahoo deal team is adamant against any negotiations to push the price downward, sources said.
Both companies declined to issue a comment.
Two weeks ago, Yahoo revealed a massive data breach that occurred in 2014, compromising at least 500 million accounts.
Apart from the breach, it was revealed that Yahoo used a custom software to comb through all of its users' emails, scanning hundreds of millions of Yahoo accounts as compliance for a request issued by a U.S. intelligence agency.
Following the massive data breach reveal, Sen. Mark Warner (D) urged the United States Securities and Exchange Commission to investigate whether Yahoo upheld its obligation to disclose crucial information such as the breach to its investors and the general public.
News of the breach and subsequent reported failures of the company to responsibly disclose this type of information put Yahoo under tense scrutiny. Verizon might be spritzing salt in the wound by persuading Yahoo for a hefty discount, almost 21 percent off the original $4.8 billion deal.
Citing a source, New York Post reported that AOL's chief executive Tim Armstrong is "getting cold feet," noting that Armstrong is vexed at Yahoo for failing to disclose the information and contemplating whether the deal can be withdrawn or simply slashed to reflect the company's dented confidence for Yahoo. According to sources, Verizon is pushing for a discount since it thinks that Yahoo's value has been truncated by the series of bad news.
Verizon acquired AOL for $4.4 billion in June last year, and if the Yahoo deal pushes through, the company intends to fuse AOL and Yahoo as a formidable competitor to Google and Facebook in terms of digital advertising.
In the past few days, Armstrong reportedly flew to the West Coast, meeting with executives from Yahoo to verbalize the impending cutback.
"[Armstrong] was out there this week laying the law down and Marissa [Mayer] is trying to protect shareholders," New York Post reported, citing a source privy to the talks. Yahoo is reportedly resisting the price cut, telling Verizon that "a deal is a deal," sources told New York Post.
Verizon's apprehension toward Yahoo seems understandable in light of the abysmal press Yahoo is slogging through. Yahoo has struggled considerably in keeping the company afloat in an era where most people have turned to its contemporaries Google and Facebook.
Verizon officially announced its acquisition of Yahoo back in July after a lengthy bidding process. The acquisition is, in a way, a recourse for the struggling company.
Photo: Rich Merritt | Flickr
