About a week ago, Verizon Communications Inc. (NYSE:VZ) stated that Yahoo! Inc. (NASDAQ:YHOO) failed to disclose a massive data breach involving 500 million account holders could jeopardize the $4.8 billion acquisition.
The news of the data breach has raised concerns that Verizon might be having cold feet about the acquisition. The telecommunication company’s general counsel Craig Silliman stated that the situation might be considered a breach of material events. He also added that his company has reasonable basis to pull out of the acquisition deal. However, Verizon cannot just up and decide to call it quits. The company would have to receive approval to exit the deal from a Delaware court.
“I think we have a reasonable basis to believe right now that the impact is material, and we’re looking to Yahoo to demonstrate to us the full impact. If they believe that it’s not, then they’ll need to show us that,” stated the general council.
An earlier report on the New York Post stated that Verizon is using the opportunity to demand a $1 billion discount. This is on the basis that Yahoo was silent or secretive about the extent of the data breach. Despite the bump in the road, Yahoo! is still optimistic about the deal, which is expected to conclude within the first quarter of 2017. Verizon is probably aware that getting out at this point is next to impossible. It is therefore most likely the company is using the situation to push for a discount.
“We are confident in Yahoo!’s value, and we continue to work towards integration with Verizon,” stated Suzanne Philion, a spokesperson for Yahoo!.
Yahoo! is also expected to reveal its Q3 earnings report today but there will be no webcast or earnings call in light of the acquisition deal with Verizon. As for the data breach, which was confirmed towards the end of September, 500 million Yahoo! accounts were affected. It exposed vital user information such as user names, email addresses, telephone numbers, passwords and dates of birth, among others.
Yahoo stocks closed the latest trading session at $41.79.