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Yahoo! to acquire Tumblr for $1.1-billion

May 20, 2013 • Online

In a deal that is yet to be formally announced by Yahoo! officials, the board of the popular search engine approved a deal to acquire blogging site Tumblr. According to The Wall Street Journal, the deal is reportedly worth $1.1 billion.

Yahoo! CEO Marissa Mayer (image: Yahoo)

“Breaking: The Yahoo board has approved a deal to pay $1.1 billion in cash for the blogging site Tumblr,” the publication Tweeted on Sunday night. Tumblr is one of the most successful blogging websites, with over 100-million users.

According to WSJ, “Yahoo’s board has approved the all-cash deal to buy Tumblr, people familiar with the matter said Sunday. Tumblr’s board also has approved the deal, one of the people said.” Yahoo! is scheduled to hold a press conference on Monday, and it is expected that the announcement will be officially made.

As to why Yahoo! would purchase Tumblr, the WSJ speculates that “Tumblr would give Yahoo, one of the original big Internet companies, a fast-growing Web service that could fill one of its many holes—namely, the lack of a thriving social-networking and communications hub. Tumblr is popular with many younger adults, in contrast with Yahoo’s older customer base. Tumblr is also growing more quickly on smartphones than Yahoo.”

Tumblr received an $85-million venture-capital investment in 2011, and at the time the company was valued at $800-million.

But the news of a possible acquisition is not exactly what everyone wants to hear, as TechCrunch co-editor Alexia Tsotsis said that if it happens, she might move her blog away from Tumblr. “I don’t know exactly why, but my Tumblr is a part of my identity. And for whatever reason, I don’t want to identify with Yahoo,” she told Time.

For that, and other reasons, it is a rather big gamble for Yahoo! CEO Marissa Mayer. “Yahoo!’s $1.1 billion deal to buy Tumblr is Mayer’s largest acquisition to date, and represents something of a high-stakes gamble, because the purchase price constitutes over one-quarter of the cash and short-term investments on Yahoo!’s balance sheet,” Time wrote.

Charlie Fripp – Consumer Tech editor

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