Sun May 19, 2013
WSJ: Yahoo Board Approves $1.1 Billion Purchase Of Tumblr
Originally published on Sun May 19, 2013 3:39 pm
The Wall Street Journal has this breaking news from the tech world:
"The Yahoo board has approved a deal to pay $1.1 billion in cash for the blogging site Tumblr."
The Journal, the only outlet reporting the approval, is sourcing its story to "people familiar with the matter." Lauren Armstrong, a Yahoo spokeswoman, told us in an email that they "don't comment on rumors or speculation."
The Journal's sister site, All Things D, had reported the deal to buy the blogging site was imminent. All Things D explained:
"Sources said that the Silicon Valley Internet giant's CEO Marissa Mayer has decided that buying Tumblr was going to be 'the stake in the ground of what her strategy is going forward for Yahoo.'
"And that is to attract younger audiences with just the kind of user-generated content Tumblr has pioneered to huge growth.
"As with all big-time acquisition deals, this one could certainly fall apart at the last minute, but source said the agreement was still in place as of today. If approved by Yahoo's board, it will be announced Monday. Yahoo has already said it has news to announce then."
It's always worth noting that these kinds of deals can fall apart.
Giga Om, by the way, ran a good story that looks at the many aspects of the deal. One of them: A $1 billion valuation for Tumblr may be a stretch. Last year, the company had revenues of less than $15 million.
Giga Om adds:
"... The painful fact is that Yahoo doesn't just look desperate — in many ways it is desperate. Mayer has made some changes since she took over the ailing former web portal, including the acquisition of Summly and a number of other mobile-focused startups and services, but the company still needs to make some aggressive moves if it is going to jump-start any growth at all. And since Yahoo has about $4 billion in cash on hand, it can arguably afford to make a big bet."
Update at 3:35 p.m. ET. A Test For Mayer:
The New York Times, which is now also reporting the story citing "people with knowledge of the agreement," reports that this will be a test for Mayer.
The Times reports:
"[Mayer] will have to ensure that Tumblr does not get lost inside Yahoo. In the past, acquisitions made by Yahoo's former chiefs, including Geocities, an early social site, and Flickr, the popular photo-sharing Web site, have either been shuttered years later or neglected within the company.
"Yahoo and Tumblr have been in talks since last week trying to finalize details of the acquisition. Facebook, Microsoft and Google all showed interest previously in purchasing Tumblr, an employee of Tumblr said, but those talks never culminated in final offers."