The assets to be divested will be known as Yahoo after the closing of the transaction
Verizon Communications has agreed to sell its media business – Verizon Media that owns Yahoo, AOL and others to funds managed by affiliates of Apollo (Apollo Funds) for $5bn.
In addition to the consideration it will receive, Verizon will get a 10% stake in the company to be known as Yahoo at the closing of the deal.
The consideration is made up of $4.25bn in cash and $750m in preferred interests.
Guru Gowrappan, the current CEO of Verizon Media, will be retained in the same role for the new company.
Apart from Yahoo and AOL, Verizon Media owns certain ad tech and media platform businesses.
According to Verizon, the corporate carveout will enable its media business to seek growth areas aggressively, while benefiting its employees, publishing partners, advertisers and users.
Gowrappan said: “The past two-quarters of double-digit growth have demonstrated our ability to transform our media ecosystem.
“With Apollo’s sector expertise and strategic insight, Yahoo will be well-positioned to capitalise on market opportunities, media and transaction experience and continue to grow our full-stack digital advertising platform.
“This transition will help to accelerate our growth for the long- term success of the company.”
Verizon had acquired the US-based web portal and online service provider AOL in July 2015 for $4.4bn. The company acquired Yahoo in 2017 for $4.5bn and subsequently merged it with AOL into a subsidiary called Oath.
In early 2019, Oath was renamed Verizon Media.
Apollo senior partner and private equity co-head David Sambur said: “We are big believers in the growth prospects of Yahoo and the macro tailwinds driving growth in digital media, advertising technology and consumer internet platforms.
“Apollo has a long track record of investing in technology and media companies and we look forward to drawing on that experience to help Yahoo continue to thrive.”
Subject to the meeting of some closing conditions, the deal is anticipated to close in the latter half of this year.