Last month, Verizon announced its intention to acquire beleaguered media company Yahoo for a reported price of $4.8 billion. Now, a new development could tank that deal. Reuters is reporting that Verizon is investigating whether a 2014 security breach that compromised more than 500 million Yahoo accounts constitutes a “material impact” that would allow Verizon to retract its purchase.
Though the hack, which Yahoo says was perpetrated by a “state-sponsored actor,” occurred two years ago, the media company claims it was only informed of the security breach a few days before disclosing it in late September. In the immediate aftermath of that news, the New York Post reported that Verizon would look to reduce its acquisition price by $1 billion, though the latest development suggests that the telecommunications company may try to call off its deal entirely. A clause in the contract between the two companies allows Verizon to withdraw if a new event “reasonably can be expected to have a material adverse effect on the business, assets, properties, results of operation or financial condition of the business,” according to Reuters.
“I think we have a reasonable basis to believe right now that the impact is material and we’re looking to Yahoo to demonstrate to us the full impact,” said Craig Silliman, Verizon’s general counsel, at a Washington roundtable. If they believe that it’s not then they’ll need to show us that.”
Should Verizon ultimately go through with the deal, it will add Yahoo to a growing digital media empire that also includes AOL and the mobile video app Go90. Verizon is also reportedly looking into an acquisition of Vessel, an online video platform launched last year.