Given that the Donald Trump victory already made Yahoo less attractive for Verizon, the latest billion-account-hack at Yahoo could let Verizon dump their buy-out and still collect a $145 million break-up fee.
Yahoo’s stock plunged over 6 percent after the company admitted its customer data had been hacked again, with at least 1 billion accounts exposed in 2014. The horribly bad news for Yahoo followed an equally bad news report in September that 500 million e-mail account were hacked in 2013. Yahoo unfortunately now has the distinction of suffering both of the history’s largest client hacks.
Verizon’s top lawyer told reporters after the first Yahoo hack that the disclosure constituted a “potential material adverse event” that would allow for the mobile powerhouse to pull out of the $4.83 billion deal they announced on July 25, 2016.
Less than 24 hours after Yahoo disclosed the even larger hack of client accounts by a “state-sponsored actor,” Bloomberg reported that Verizon is “exploring a price cut or possible exit” from its proposed Yahoo acquisition.
Breitbart reported that Google and other Silicon Valley companies were huge corporate winners when Chairman Tom Wheeler and the other two Democrat political appointees on the FCC voted on a party-line vote in mid-February 2015 for a new regulatory structure called ‘Net Neutrality.’ Although Wheeler claimed, “These enforceable, bright-line rules will ban paid prioritization, and the blocking and throttling of lawful content and services,” they were a huge economic disaster for Verizon’s high-speed broadband business model.
Verizon responded last year by paying $4.4 billion to buy AOL in order to pick up popular news sites, large advertising business, and more than 2 million Internet dial-up subscribers. Buying Yahoo was expected to give the former telephone company to achieve “scale” by controlling a second web content pioneer.
After President and CEO Marissa Mayer began organizing an auction in March, Yahoo stock doubled from $26 a share to $51 by September. But she announced on Wednesday the new hack, Yahoo’s stock has been plunging to $38.40 in after-market trading.
The buyer normally has to pay a break-up fee if an acquisition fails. But Yahoo chose to run its own auction that “communicated with a total of 51 parties to evaluate their interest in a potential transaction.” Then between February and April 2016, a “short list” of “32 parties signed confidentiality agreements with Yahoo,” including 10 strategic parties and 22 financial sponsors.
Yahoo’s 13D proxy statement filed with the SEC was mostly boilerplate disclosure, but it seemed that something must have been a potential problem at Yahoo for the company to offer a $145 million termination fee to Verizon if the deal did not close.
Yahoo on Wednesday issued a statement saying personal information from more than a billion user accounts was stolen in 2014. The news followed the company’s announcement in September that hackers had stolen personal data from at least half a billion accounts in 2013. Yahoo said it believes the two thefts were by different parties.
Yahoo admitted that both hacks were so extensive that they included users’ names, email addresses, phone numbers, dates of birth, scrambled passwords and security questions and answers. But Yahoo stated, “Payment card data and bank account information are not stored in the system the company believes was affected.”
Yahoo said they have invalidated unencrypted security questions and answers in user accounts. They are in the process of notifying potentially affected users and is requiring them to change their passwords.
Yahoo was already facing nearly two dozen class-action lawsuits over the first breach and the company’s failure to report it on a timely basis. A federal 3 judge panel last week consolidated 5 of the suits into a mass tort in the San Jose U.S. District Court.
Undoubtedly, there will be a huge number of user lawsuits filed against Yahoo in the next few weeks.