Verizon is trying to get the price it pays for Yahoo! lowered by US$1 billion following the string of bad news that the latter has been hit with in recent weeks.
The New York Post quoted what it described as a source familiar with Verizon's thinking as saying: "In the last day we’ve heard that [AOL boss] Tim [Armstrong] is getting cold feet. He's pretty upset about the lack of disclosure and he’s saying, ‘Can we get out of this or can we reduce the price'?"
The two companies agreed on a US$4.83 billion sale on 25 July, slightly more than a tenth of what Microsoft offered to buy Yahoo! eight years ago.
Since then, Yahoo! has had a spate of bad news. In September, the company confirmed that the account details of 500 million users had been leaked two years ago.
{loadposition sam08}And then, last week, reports emerged of the company agreeing to use a program provided by either the NSA or the FBI to scan the emails of all its users to locate specific information.
The Post said its sources had said Armstrong visited the West Coast last week to argue for a price reduction.
Verizon plans to use its AOL property along with Yahoo! to reach a billion consumers if the deal is completed in the first quarter of 2017. The plan is to reach two billion people by 2020 and gain enough muscle to compete with Google and Facebook, according to the Post.
One source told the Post that the US$1 billion price reduction was in addition to a US$1 billion that Verizon could set aside to pay out as possible liabilities over the email hack.
Yahoo!'s former interim chief executive Ross Levinsohn told CNBC during the week: "If I’m sitting at Verizon right now … just from a business standpoint, I’d probably reserve a bunch of money against the deal or go back to Yahoo! and ask for a discount.
"Now if they do that, the question I have is: Does that open the process back up?"