Yahoo is close to renegotiating its original deal with Verizon, taking close to $300 million off the price to preserve the sale, a person with knowledge of the matter said.
SAN FRANCISCO — Soon after Yahoo disclosed the first of two enormous data breaches that threatened to upend a $4.8 billion deal it had reached with Verizon Communications, the embattled company began to confront an unpleasant potential future.
Yahoo could have battled Verizon to preserve the original price tag, a campaign that could have ended up in a Delaware courtroom and led to months of bitter wrangling. Moreover, that strategy would have run the risk of allowing Verizon to walk away from the purchase altogether.
Instead, Yahoo is close to renegotiating its original deal, choosing to take close to $300 million off the price to preserve the sale, a person with knowledge of the matter said Wednesday.
Under the revised terms, the two companies are expected to share legal responsibility and costs for the data breaches, the person with knowledge of the matter said. The new deal is expected to be announced within days, this person added.
Most Read Stories
- The results are in: Here's where the new Dick's Drive-In will be
- Prosecutor reviewing sex-abuse allegations against ‘Deadliest Catch’ star Sig Hansen
- Elon Musk’s SpaceX on brink of `Wright Brothers moment’ with reused rocket
- Best way to slow aging? Exercise, but not just any kind
- Richard Branson celebrates Virgin Atlantic’s entry to Seattle market, tears into Alaska Air
Shares of Yahoo, which had been trading lower Wednesday, surged after Bloomberg reported the renegotiations. The shares closed up 1.4 percent.
Representatives for both companies declined to comment on the discussions.
On Wednesday, Yahoo disclosed additional information stemming from the breaches, notifying some users that it had found evidence of attempts to log in to their accounts without a password. Those attempts were made using data stolen in a 2014 hacking.
Yahoo did not ask the users to change their passwords, but it urged them to use an account key, an optional feature that uses a smartphone to validate all attempted logins on a Yahoo account.
Verizon executives had earlier mused publicly about the severity of the Yahoo breaches and whether they had a material effect on the companies’ deal, announced in July.
Analysts, however, said telecommunications giant Verizon had plenty of reasons to complete the transaction quickly, particularly to build up its digital-media business.
Verizon’s core business, wireless phone service, is being hurt by stiffened competition from AT&T, Bellevue-based T-Mobile US and Sprint. Verizon was recently forced to bring back unlimited data plans to match its rivals’ offerings.
For Yahoo, salvaging the deal was even more vital.
In putting its core internet business — including its still-popular email service, Yahoo Finance and sports arms — up for sale last year, the company sought to end years of questions about its declining business and whether it could effect a turnaround.
A succession of chief executives, most recently Marissa Mayer, tried but failed, and investor discontent was high.
After a public sales process, Verizon emerged the winner.
Verizon sought Yahoo as part of its effort to build a digital-media empire, anchored by its earlier purchase of AOL, another aging internet property. AOL could not achieve the scale necessary to challenge Google and Facebook on its own, and Yahoo’s business was meant to play a crucial role, bringing in more than 1 billion users.
Verizon’s archrival, AT&T, is also building a new business line in media. But in seeking to acquire Time Warner for $85 billion, it is aiming for a much greater scale, more quickly.
Still, the hacking disclosures appeared to rattle Verizon’s plans.
In September, Yahoo revealed that intruders it believed were backed by a foreign government had stolen the data, including encrypted passwords, of 500 million user accounts in 2014.
Two months ago, Yahoo announced that an even larger breach, involving 1 billion accounts, had occurred in 2013. That breach compromised additional data, including security questions used to reset passwords. Yahoo forced all of the affected users to change their passwords.
In both cases, there is evidence that Yahoo knew about the intrusions for some time before they were disclosed.
Yahoo has shared few additional details in recent months, citing continuing investigations by outside security firms, its board of directors and law-enforcement authorities.
Its reticence drew the ire last week of the chairman of the Senate Commerce Committee, John Thune, R-S.D., who sent a letter to Mayer demanding more information about the breaches and what Yahoo has done to protect its users since then.
Yahoo said last month that it was confident its deal with Verizon would close by the end of June.
The long delay has taken a toll on Yahoo’s business. The company has continued to lose market share in digital advertising, as Facebook and Google expand their dominance and shiny newcomers like Snapchat attract the attention of marketers.
While waiting for the deal, Yahoo’s management has focused on cutting costs, eliminating more than 2,100 jobs in the past year.
Yahoo stockholders are eager to see the deal close so that Yahoo can focus on finding ways to extract the value of its 15 percent stake in Alibaba, China’s largest e-commerce company, and its 36 percent stake in Yahoo Japan, an affiliated company controlled by SoftBank Group.
Those investments, which are supposed to remain in a stub company called Altaba, are worth about $48 billion combined.