Verizon facing $500m charge over Yahoo acquisition
Pre-tax severance cost relates to integrating Yahoo with AOL to form new unit Oath
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 closures.
Former AOL chief Tim Armstrong, who will head 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 2020."
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 Altaba.