Yahoo! Inc. (NASDAQ:YHOO)’s board of directors has finally approved acquisition of Tumblr for a whopping $1.1 billion, according to a report of the Wall Street Journal. There were rumors floating from quite some time that Yahoo is interested in acquiring Tumblr, and now WSJ too marks their stamp of approval on the rumors.
If this deal goes through, then Tumblr will run as a separate business and independent property, and we can see an official announcement on Monday, from one or both the parties, reports WSJ. Yahoo is holding an event on Monday, at New York, and perhaps the company can announce about the acquisition during this event. Tumblrs board of investors like Sequoia Capital, Union Square Ventures and Spark Capital, who have invested $125 into the company have already approved Yahoo’s bid, according to a report.
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The Tumblr acquisition would be Yahoo! Inc. (NASDAQ:YHOO) CEO Marissa Mayer’s biggest move in trying to achieve a goal of making Yahoo a daily habit for Internet users. Yahoo has an audience of 700 million, and with Tumblr, Yahoo might be planning to bring a large number of user base – mostly young generation and tech savvy users who blog. Tumblr, on the other hand has an audience and social network of 108 million blogs, with 100 million visitors per month.
Yahoo! Inc. (NASDAQ:YHOO) has been on a shopping spree as the company has made many acquisitions after Marissa Mayer became the CEO. One of the high-profile purchases was the Summly buy, a news summarization startup that Yahoo acquired for around $30 million.
If this deal really happens, then some users on Twitter are threatening to leave Tumblr for good. The same incident happened with Instagram as users claimed to shut down their accounts and leave the service if Facebook acquires Instagram. Those users were worried about their privacy as Facebook’s been known to not handle user’s privacy seriously.
Yahoo! Inc. (NASDAQ:YHOO) currently has only $1.2 billion cash on hand as per its recent quarterly earnings, and if this deal goes successful, then Yahoo would need to pay $1.1 billion cash to Tumblr. What raises the eyebrows of many is why is the company not buying Tumblr with a mix of both cash and stock? Well, now only Yahoo! Inc. (NASDAQ:YHOO) would have the answer for this question.