Winning the accolade of being the company hit with the ‘biggest known data breach in history’ was always going to be costly for Yahoo, with many speculating on the impact to brand, reputation and customer base in the breach aftermath. Although it is hard to quantify the impact to brand and reputation as of yet, the hit Yahoo has had to take in regards to its Verizon deal is now set in stone.
An agreement has now been reached on the final price tag of Yahoo’s core internet business, with US telecoms giant Verizon set to acquire the search giant’s assets for $350 million less than originally agreed. Following the major discount, Verizon confirmed that it will be buying the Yahoo business for around $4.48bn.
Under the terms of the new deal, both companies will split the cost of some lawsuits arising from the data breaches, announced last year. In news which should strike fear in the hearts of boardrooms across the world, Rob Norris, VP Head of Enterprise & Cyber Security EMEIA at Fujitsu, said:
“If cyber security wasn’t already a priority agenda item across boardrooms, the news today that Yahoo has agreed to take a $350m cut on the original $4.8bn sale to Verizon due to its significant cyber security breaches will resonate with key stakeholders in many organisations.
“The looming legislation around GDPR has already established cyber security and breach readiness as topics requiring serious attention from business executives, due to the eye-watering fines of €20m or 4% of global annual turnover for non-compliance. However, today’s news shows that a cyber-attack could also have a significant impact for companies in merger and acquisition discussions.”
Perhaps the silver-lining for Yahoo in the slashed acquisition price is the fact that it did not even come close to the billion dollar projections predicted by experts.
In the aftermath of the disclosure of the first data breach, Verizon’s general counsel Craig Silliman said that it was “reasonable” for Verizon to believe that the impact of the breach was “material”. This refers to specific legal language in the deal that says Verizon can withdraw if an event occurs which “reasonably can be expected to have a material adverse effect on the business, assets, properties, results of operation or financial condition of the business.”
Further reports suggested that Verizon was looking for a $1 billion price reduction in the acquisition deal, with the New York Post reporting that this move was being met with fierce resistance from Yahoo. John Madelin, CEO at RelianceACSN, predicted that Verizon could slash the price of the deal by more than double what was sought after following the first hack.
“If Verizon were seeking a billion-dollar discount from the agreed $4.8bn takeover, then logically a breach twice the size should shave off a further $2bn.”
But the huge billion dollar predictions did not come to fruition, although Verizon’s offer is now well below the $44bn offered by Microsoft for Yahoo in 2008.