Yahoo CEO Marissa Mayer.
SAN FRANCISCO (MarketWatch) — Yahoo Inc’s board of directors has approved the $1.1 billion, all-cash purchase of the blogging site Tumblr, The Wall Street Journal reported Sunday.
The board on Saturday had been reported ready to meet Sunday to consider the deal.
The move comes as Yahoo YHOO -0.23% looks for ways to be “cool again,” and acquiring a platform used by younger audiences would make sense.
David Karp, Tumblr’s founder and chief executive, would remain, according to AllThingsD.
Tumblr would continue to operate as an independent business, the Journal said, citing unnamed people close to the situation.
A deal could be announced as soon as Monday, one of the people said.
Spokesmen for Yahoo and Tumblr didn’t immediately respond to requests for comment, the Journal said.
By acquiring Tumblr, Yahoo would instantly gain a social-media website that has become a hub of communication and blogging for millions of people. Yahoo could help Tumblr generate more revenue from advertisements, according to the Journal.
Tumblr, founded in 2007, fast built a following by making it easy for people to post blogs and photos, follow other people on Tumblr and receive updates via a feed. The website’s simple design has lowered the bar for online publishing and effectively merged blogging with social media, the Journal noted.
By acquiring Tumblr, Yahoo would instantly gain a social-media site that has become a hub of communication and blogging for millions of people, but one that generates little revenue, the Journal said.
Karp has focused on building the company’s user base for its minimalist blogging platform while leaving for later the question of earning money, a pattern typical for young Internet companies, according to the Journal report.
Tumblr began placing ads on its service last year. Karp, who once told the Los Angeles Times that he was “pretty opposed to advertising,” said in recent media reports that Tumblr generated $13 million in revenue last year, according to the Journal report.
People familiar with the matter said Yahoo believes it could help Tumblr bring in more money by selling ads, boosting its own revenue in the process.
Tumblr has grown quickly. In March, the blogging site had about 117 million unique users world-wide, up from about 58 million a year earlier, according to comScore Inc. SCOR +3.85%On smartphones, Tumblr had almost 12 million unique visitors, up from about four million a year earlier, comScore said.
Yahoo Chief Executive Marissa Mayer became interested in the blogging site a couple of months ago, the Journal said, and the company considers the takeover to be a way to jump-start its revenue growth and obtain a bigger presence in social media tied to digital devices.
Acquisitions have long been expected to be part of Mayer’s strategy, though to date she only has acquired small companies for their engineering and product-management talent, the Journal said.
Yahoo recently pulled out of a roughly $200 million deal to buy a controlling interest in the video website Dailymotion, owned by France Télécom SA, before the French government prevented the deal, the Journal reported
On Monday, Yahoo will also deliver an update about its Flickr photo-sharing unit, according to the Journal.
Source:MarketWatch
