Yahoo salvages Verizon deal with $350-M discount

SAN FRANCISCO — Yahoo is taking a $350 million hit on its previously announced $4.8 billion sale to Verizon in a concession for security lapses that exposed personal information stored in more than one billion Yahoo user accounts.

The revised agreement, announced Tuesday, eases investor worries that Verizon Communications Inc. would demand a discount of at least $1 billion or cancel the deal entirely.

The hacking bombshells, disclosed after the two companies agreed on a sale, represent the two biggest security breaches in internet history.

The breaches raised concerns that people might decrease their use of Yahoo email and other digital services that Verizon is buying. A smaller audience makes Yahoo’s services less valuable because it reduces the opportunities to show ads - the main reason that Verizon struck the deal seven months ago.

Yahoo has maintained that its users have remained loyal, despite any mistrust that might have been caused by its lax security and the lengthy delay in discovering and disclosing the hacks. The separate attacks occurred in 2013 and 2014; Yahoo disclosed them this past September and December.

The lower price, now pegged at $4.48 billion, will cost Yahoo shareholders roughly 37 cents per share. But they may also be responsible for substantial legal costs.

After the Verizon deal closes, any future bills stemming from the hack will be shouldered by Altaba Inc. – a company that will become the caretaker of Yahoo’s remains, which will include about $7 billion in cash and lucrative stakes in Chinese e-commerce giant Alibaba Group and Yahoo Japan.

Altaba will be responsible for all costs stemming from shareholder lawsuits and a Securities and Exchange Commission probe into how Yahoo handled the disclosure of the massive hacks. Verizon and Altaba will split costs from all other hack-related lawsuits and government investigations.

This agreement “provides protections for both sides” and should help the deal close by the end of June, Marni Walden, Verizon’s head of product innovation and new businesses, said in a statement. Yahoo shareholders have to approve it.