Yahoo to Formally Announce its Acquisition of Tumblr for $1.1 Billion

The Yahoo Board headed by CEO Marissa Mayer has approved a $1.1 billion cash deal to buy Tumblr, the blogging site. Sources say that the vote is a unanimous one. This confirmation comes after rumors spread last week that the CEO of Tumblr David Carp is in deep discussion with Mayer. On Sunday, the Wall Street Journal reported that the deal is on.

There is no confirmation from the Yahoo spokesman yet, but the official announcement from Yahoo is expected on Monday. Yahoo is holding an event at New York City where Tumblr is headquartered.

Terms

There has been no official response from Tumblr as well for requests for comments but unnamed sources say that Tumblr would remain independent. 26-year old David Carp, founder and CEO of Tumblr will remain as the head of his company.

Yahoo is tapping into the social network user-base and is one of Mayer’s means of increasing Yahoo traffic. Yahoo hopes to increase its social media presence and attract the younger crowd who are now into Facebook and Twitter.

Knock, knock, knocking at your door

This is not the first move from Mayer to achieve such end, but this is by far the most costly. Since Mayer took the helm, Yahoo’s e-mail service has a redesigned homepage. And Flickr, the photo-sharing and management app’s service model has been refreshed. The point of all this is to encourage users of the Internet to use Yahoo more. The competition is only becoming more intense and Yahoo needs to step it up or be left behind. This bold move is a step towards a change in reputation.

War-time CEO

Marissa Mayer became head of Yahoo last year in July 2012. Mayer was a Google executive before she changed allegiances. Yahoo is a Web pioneer but its popularity has waned in recent years. Yahoo has already been eclipsed by Google. Mayer is heading Yahoo’s efforts to be part of the social media race. However, all of the upgrades have not yet translated to increased monetary rewards for the company.

In 2012, Yahoo’s total annual revenue amounted to $13 million. So far the first quarter sales for Yahoo can only be described as “lousy.” It remains to be seen whether or not the investment ensures a boost in Yahoo revenues.

Not a guarantee of street credibility

Internet users are already responding to the acquisition plans. Many are saying that Tumblr will be ruined when it fills up with advertisements. Tumblr’s main attraction is its very simple design that combines social networking with blogging. Tumblr now has a total of 50.7 billion posts contained within 108 million blogs. Tumblr is also designed for mobile devices.

Others are saying that Yahoo buying Tumblr does not necessarily mean adverts. The opinion that is going around is that Yahoo’s street credibility is not guaranteed when it buys Tumblr and integrates the blogging site into its services.

Yahoo’s impending purchase of Tumblr is the largest acquisition in the industry in years, even larger than Facebook’s acquisition of Instagram in 2012 that was worth $1 billion.

Photo Credit: Yahoo Headquarters