Yahoo Inc. is coming under renewed scrutiny by federal investigators and lawmakers after disclosing the largest known data breach in history.
The revelation prompted Verizon Communications Inc. to demand better terms for its planned purchase of Yahoo’s internet business, Reuters reports.
Shares of the Sunnyvale, California-based internet pioneer fell more than 6 percent after it announced the breach of data belonging to more than one billion users late Wednesday, following another large hack reported in September.
Verizon, which agreed to buy Yahoo’s core internet business in July for US$4.8 billion, is now trying to persuade Yahoo to amend the terms of the acquisition agreement to reflect the economic damage from the two hacks, according to people familiar with the matter.
The US No. 1 wireless carrier still expects to go through with the deal but is looking for “major concessions” in light of the most recent breach, according to another person familiar with the situation.
Asked about the status of the deal, a Yahoo spokesperson said: “We are confident in Yahoo’s value and we continue to work towards integration with Verizon.”
Verizon had already said in October it was reviewing the deal after September’s breach disclosure.
On Wednesday, it said it would “review the impact of this new development before reaching any final conclusions” about whether to proceed.
Verizon has threatened to go to court to get out of the deal if it is not repriced, citing a material adverse effect, said the people familiar with the matter.
No court in Delaware, where Yahoo is incorporated, has ever found that a material adverse effect has occurred that would allow companies to terminate a merger agreement.
Nevertheless, the threat of a court case on the issue has been successfully used by companies to renegotiate deals, and experts said that some concessions from Yahoo are likely, given the magnitude of the cyber security breaches.
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