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Yahoo has delayed the timeframe for closing its $4.8 billion acquisition by Verizon, as the company grapples with additional questions related to a pair of major security breaches that recently came to light.
“Given work required to meet closing conditions, the transaction is now expected to close in Q2 of 2017,” Yahoo said on Monday. The company had previously said the deal would close in the first quarter of the year.
Yahoo did not elaborate on the nature of the work causing the postponement.
A source familiar with the matter told Business Insider that the parties are working through additional questions resulting from Yahoo’s recent disclosures about hacking incidents affecting its service, as well as customary integration matters spanning sales, product and other operations.
Shares of Yahoo were up less than 1% in after hours trading on Monday.
Although Yahoo had aimed to close the deal by the end of Q1, the terms of the transaction specify that the parties have until April 24 to close the deal. After April 24, either party can terminate the deal, or seek a 3-month extension. Yahoo is subject to a $144.8 million termination fee if the deal falls through.
The update on the deal’s timing overshadowed the company’s fourth quarter financial results, which topped Wall Street’s targets.
Here are the key numbers:
Q4 Revenue (ex TAC): $960.1 million, down roughly 4% year-on-year, but above Wall Street’s $908 million target.
EPS (adjusted): $0.25, above the $0.21 expected by Wall Street.
The delay to the closing of the Verizon deal adds further uncertainty to the transaction which has been thrown into turmoil following Yahoo’s recent revelation that it had been the victim of several major hacking incidents. The two separate security breaches, which occurred in 2013 and 2014, affected more than a billion of its users’ accounts.
Yahoo did not publicly disclose the incidents until after it had inked the merger agreement with Verizon.
Verizon has reportedly sought to renegotiate the deal for a lower price or other concessions on account of the incidents. And on Monday the Wall Street Journal reported that the SEC was investigating why it took Yahoo so long to disclose the security breaches.
The company’s decision not to hold the customary post-earnings conference call with Wall Street analysts (due to what it said was the pending Verizon deal) meant that investors were left with many unanswered questions.
Still, the fact that Yahoo believes the deal is still on track to close in the first half of the year may be a relief to some investors worried that the transaction could be scrapped altogether.
Yahoo said on Monday that it is “working expeditiously to close the transaction as soon as practicable in Q2.”