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16 June 2017
| James Pearce
Verizon will take a $500 million pre-tax hit in Q2 as part of its $4.5 billion takeover of Yahoo, completed on 14 June.
The severance costs relate to
integrating Yahoo with another of the US
telco’s previous acquisitions, AOL, into a new
unit which it has called "Oath".
An SEC filing revealed Verizon will mark down the $500
million charge as part of a wave of job cuts and office
Former AOL chief Tim Armstrong, who will head up the new
unit, revealed that Oath will see a reduction of the combined
workforces of both companies by up to 15%, or around 2,100
jobs, as result of integration.
"In connection with the transaction, Verizon expects to
record severance, acquisition and integration-related expenses
of approximately $500 million pre-tax in the second quarter of
2017," Verizon said.
"Verizon expects to realize over $1 billion in cumulative
operating expense synergies from the transaction through
When the takeover was first announced, Verizon CEO Lowell
McAdam highlighted the ability to compete with Facebook and
Google as a key driver for the buy.
The takeover means Verizon has access to
Yahoo’s core online business, but its remaining
assets, which include a stake in Alibaba and Yahoo Japan, has
been span into a new company, called
mergers and acquisitions,