Yahoo CEO Marissa Mayer. AP Photo/Lionel Cironneau, File Verizon will acquire Yahoo's core internet business for about $4.83 billion in cash, the telecommunications company announced on Monday.

Yahoo will be merged with Verizon's AOL unit under Marni Walden, the executive vice president and president of product innovation and new businesses.

The deal will see Verizon scoop up Yahoo's search, mail, content, and ad-tech businesses.

It will double Verizon's digital advertising business, which is now poised to reach an estimated 4.5% share of the US internet advertising market, according to eMarketer. It will place Verizon in a distant third place, in terms of US digital ad market share, to Facebook (17%) and Google (36%).

Yahoo says it has a global audience of more than 1 billion monthly active users, including 600 million monthly active mobile users. Yahoo.com's content verticals — including news, finance, and sports — will join the likes of The Huffington Post, TechCrunch, and AOL.com.

Part of Yahoo will remain after the deal: Yahoo is keeping its stakes in the Chinese internet giant Alibaba and in Yahoo Japan, which have a combined value of $40 billion. Yahoo had initially attempted to spin off its Alibaba stake, but the move was abandoned over fears that the company would incur a hefty tax bill. Yahoo will also retain its cash, noncore patents (called the Excalibur portfolio), convertible notes, and other minority investments.

When the deal closes, that part of Yahoo will change its name and become a publicly traded investment company. The company says it intends to return "substantially all" of its net cash to shareholders.

The acquisition marks the final chapter in a roller-coaster story for Yahoo, which was founded in 1994 as one of the first web directory and which became one of the leading internet media businesses.

Yahoo's star began to fade over the past decade, however, as it failed to keep up with rivals like Google and Facebook in the bid for consumer attention and advertiser spend.

Marissa Mayer was hired from Google as Yahoo's CEO in 2012 to turn around the business. But she failed to stem the company's revenue and profit declines, and a group of investors led by the activist firm Starboard pressured management to sell up.

Two years ago, AOL CEO Tim Armstrong had proposed a merger with Yahoo that Mayer rejected. Now Armstrong, who sold AOL to Verizon for $4.4 billion last year, has gotten his wish.

A Yahoo SEC filing shows that Mayer is set to receive a $54.9 million severance package when she leaves the company. In a letter to Yahoo employees released Monday, however, Mayer said she was "planning to stay" at Yahoo/AOL.

Verizon reports its second-quarter earnings on Tuesday. Last week, Yahoo reported a 5% rise in revenue year-on-year to $1.31 billion in its second quarter, versus the $1.08 billion expected by analysts. The company's losses widened to $440 million in the period.

Lowell McAdam, Verizon's chairman and CEO, said: "Just over a year ago we acquired AOL to enhance our strategy of providing a cross-screen connection for consumers, creators and advertisers. The acquisition of Yahoo will put Verizon in a highly competitive position as a top global mobile media company, and help accelerate our revenue stream in digital advertising."

Here is the full official statement from Verizon:

Verizon to acquire Yahoo’s operating business



Transaction will create a new rival in mobile media technology reaching over 1B users* with a roster of the world’s most beloved brands



BASKING RIDGE, NJ, and SUNNYVALE, Calif. – July 25, 2016 – Verizon Communications Inc. (NYSE, Nasdaq: VZ) and Yahoo! Inc. (Nasdaq: YHOO) today announce they have entered into a definitive agreement under which Verizon will acquire Yahoo’s operating business for approximately $4.83 billion in cash, subject to customary closing adjustments.



Yahoo informs, connects and entertains a global audience of more than 1 billion monthly active users** -- including 600 million monthly active mobile users*** through its search, communications and digital content products. Yahoo also connects advertisers with target audiences through a streamlined advertising technology stack that combines the power of their data, content and technology.



Lowell McAdam, Verizon Chairman and CEO, said: “Just over a year ago we acquired AOL to enhance our strategy of providing a cross-screen connection for consumers, creators and advertisers. The acquisition of Yahoo will put Verizon in a highly competitive position as a top global mobile media company, and help accelerate our revenue stream in digital advertising.”



Yahoo will be integrated with AOL under Marni Walden, EVP and President of the Product Innovation and New Businesses organization at Verizon.



Marissa Mayer, CEO of Yahoo, said: “Yahoo is a company that has changed the world, and will continue to do so through this combination with Verizon and AOL. The sale of our operating business, which effectively separates our Asian asset equity stakes, is an important step in our plan to unlock shareholder value for Yahoo. This transaction also sets up a great opportunity for Yahoo to build further distribution and accelerate our work in mobile, video, native advertising and social.”



Mayer added, “Yahoo and AOL popularized the Internet, email, search and real-time media. It’s poetic to be joining forces with AOL and Verizon as we enter our next chapter focused on achieving scale on mobile. We have a terrific, loyal, experienced and quality team, and I couldn’t be prouder of our achievements to date, including building our new lines of business to $1.6 billion in GAAP revenue in 2015. I’m excited to extend our momentum through this transaction.”



Tim Armstrong, CEO of AOL, said: “Our mission at AOL is to build brands people love, and we will continue to invest in and grow them. Yahoo has been a long-time investor in premium content and created some of the most beloved consumer brands in key categories like sports, news and finance.”



Under Armstrong, AOL has invested in and grown global premium brands, including The Huffington Post, TechCrunch, Engadget, MAKERS and AOL.com, and market-leading programmatic platforms -- including ONE by AOL for both advertisers and publishers.



Armstrong added, “We have enormous respect for what Yahoo has accomplished: this transaction is about unleashing Yahoo’s full potential, building upon our collective synergies, and strengthening and accelerating that growth. Combining Verizon, AOL and Yahoo will create a new powerful competitive rival in mobile media, and an open, scaled alternative offering for advertisers and publishers.”



The addition of Yahoo to Verizon and AOL will create one of the largest portfolios of owned and partnered global brands with extensive distribution capabilities. Combined, AOL and Yahoo will have more than 25 brands in its portfolio for continued investment and growth. Yahoo’s key assets include market-leading premium content brands in major categories including finance, news and sports, as well as one of the most popular email services globally with approximately 225 million monthly active users****. Additional technology assets in the advertising space include Brightroll, a programmatic demand-side platform; Flurry, an independent mobile apps analytics service; and Gemini, a native and search advertising solution.



The deal is subject to customary closing conditions, approval by Yahoo’s shareholders, and regulatory approvals, and is expected to close in Q1 of 2017. Until the closing, Yahoo will continue to operate independently, offering and improving its own products and services for users, advertisers, developers and partners.



Verizon will generally issue cash-settled Verizon RSUs for Yahoo RSUs that are outstanding at the close.



The sale does not include Yahoo’s cash, its shares in Alibaba Group Holdings, its shares in Yahoo Japan, Yahoo’s convertible notes, certain minority investments, and Yahoo’s non-core patents (called the Excalibur portfolio). These assets will continue to be held by Yahoo, which will change its name at closing and become a registered, publicly traded investment company. Yahoo will provide additional information about the investment company at a future date.



Yahoo intends to return substantially all of its net cash to shareholders and will determine and communicate a specific capital return strategy at an appropriate time.



LionTree Advisors, LLC, Allen & Company LLC, Bank of America Merrill Lynch and Guggenheim Securities, LLC are acting as financial advisors to Verizon. Wachtell, Lipton, Rosen & Katz, Gibson, Dunn & Crutcher LLP, Covington & Burling LLP and Winston & Strawn LLP are acting as legal advisors to Verizon.



Goldman, Sachs & Co., J.P. Morgan Securities LLC and PJT Partners are acting as financial advisors to the Yahoo Board and its Strategic Review Committee. Skadden, Arps, Slate, Meagher & Flom LLP, Wilson Sonsini Goodrich & Rosati and Weil Gotshal & Manges LLP are acting as legal advisors to Yahoo. Cravath, Swaine & Moore LLP is independent legal advisor to Yahoo’s Strategic Review Committee.



Yahoo will hold an investor call at 5:30 a.m. Pacific/8:30 a.m. Eastern today. Investors can dial in at (866) 593-9949 and investors outside the U.S. can dial in at (973) 935-8154, using the conference ID 55971720. The call will be hosted by Yahoo CEO Marissa Mayer and Yahoo CFO Ken Goldman. Yahoo will also make the Chair of the Strategic Review Committee, Tom McInerney, and Yahoo Chairman of the Board Maynard Webb available for questions.



Verizon will announce second-quarter 2016 results tomorrow, July 26. To provide further context for investors about this transaction and other strategic initiatives, McAdam will participate in Verizon’s earnings webcast beginning 8:30 a.m. Eastern tomorrow. Access instructions and presentation materials, including Verizon’s earnings release, will be available at 7 a.m. on Verizon’s Investor Relations website, www.verizon.com/about/investors/.



*Based on Yahoo internal metrics, Jan. 2016 and AOL Internal, June 2016

**Yahoo internal user metrics, Jan. 2016

***Yahoo internal user metrics, Jan 2016

****Yahoo internal user metrics, Jan. 2016. Mail monthly active users includes 58M IMAP/POP only users – ie. Yahoo monthly users that access their mail using other companies mail application



About Verizon

Verizon Communications Inc. (NYSE, Nasdaq: VZ), headquartered in New York City, generated nearly $132 billion in 2015 revenues. Verizon operates America’s most reliable wireless network, with 112.6 million retail connections nationwide. The company also provides communications and entertainment services over America’s most advanced fiber-optic network, and delivers integrated business solutions to customers worldwide.



About AOL

AOL is a media technology company with a mission to connect consumers and creators through open marketplaces. AOL uses data to disrupt content production, distribution and monetization. The company connects publishers with advertisers across its global, programmatic platforms, tapping into Microsoft inventory and original content brands like TechCrunch, The Huffington Post and MAKERS, which reach over 500 million monthly global consumers. Within its mobile advertising network alone, AOL has a reach of roughly 600 million users. A subsidiary of Verizon, AOL is shaping the digital future.

About Yahoo

Yahoo is a guide to digital information discovery, focused on informing, connecting, and entertaining users through its search, communications, and digital content products. By creating highly personalized experiences, Yahoo helps users discover the information that matters most to them around the world -- on mobile or desktop. Yahoo connects advertisers with target audiences through a streamlined advertising technology stack that combines the power of Yahoo's data, content, and technology. Yahoo is headquartered in Sunnyvale, California, and has offices located throughout the Americas, Asia Pacific (APAC) and the Europe, Middle East and Africa (EMEA) regions. For more information, visit the pressroom (pressroom.yahoo.net) or the Company's blog (yahoo.tumblr.com).