Yahoo’s Mayer buying Tumblr for $1.1 billion in biggest deal

New York

“This is a big, big win for New York,” Lerer said. “Everybody believes that there’s going to be a bunch of billion-dollar companies coming out of New York in the next few years, and this is the beginning.”

Yahoo’s purchase may help seed the next generation of New York startups, according to Howard Lerman, CEO of Yext, a business-listings website based in New York.

“It’s going to, first of all, give a billion dollars into the VCs and the people that work at Tumblr, and secondly it’s going to give the people at Tumblr the confidence to go out and try this themselves,” Lerman said.

Seeking Buyer

Tumblr had contacted bigger technology companies seeking to be bought, or form a partnership, prior to closing the deal with Yahoo, according to people with knowledge of the matter, who asked not to be identified because the overtures were private.

Mayer has purchased at least 11 companies in her 10 months as CEO, from mobile app makers Stamped Inc. and Jybe Inc. to Summly, the news-reading application created by teenager Nick D’Aloisio. Before Tumblr, most of her acquisitions have been small and focused on talent acquisitions -- small teams bought at low prices -- an approach she advocated during her first conference call with analysts last year.

Tumblr ranks among Yahoo’s largest acquisitions, which include the $5.7 billion purchase of Mark Cuban’s Broadcast.com and a $3.6 billion deal for Web-hosting site Geocities in 1999.

Dealmaking at Yahoo is being led by Jacqueline Reses, a private-equity veteran who was promoted last month to the role of chief development officer to reflect her oversight of talent through acquisitions, partnerships and company culture. Reses told employees at a staff meeting in late February that Yahoo is working on two “significant” acquisitions, according to a report in technology blog AllThingsD.

Yahoo Deals

Yahoo’s plan to buy a stake in France Telecom SA’s video site Dailymotion stalled last month after a disagreement about the deal, according to the French government.

Mayer had little to show for her efforts to turn around the company as of last month, when Yahoo reported a drop in its main display-advertising business and issued a sales forecast for this quarter that may fall short of analysts’ estimates. Mayer’s push to revamp products such as Yahoo’s home page and e-mail have made little headway to reverse a decline in display, an area where Google and Facebook are gaining ground.

Bloomberg News

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