Yahoo has now approved buying out Tumblr with a huge $1.1 billion all-cash deal. While details about when the official vote was taken are not out yet, according to sources who spoke to AllThingsD.com, the acquisition was given for the board at Yahoo and was unanimously agreed on by everyone.
Though Tumblr had approached various other companies such as Facebook, Google, Microsoft and also Twitter, earlier in the year, when the deal itself finally broke, there were no other competing bids reported.
Part of the deal includes Tumblr CEO David Karp staying on at Yahoo for at least four years while having a considerable amount of control. The main focus for Tumblr here though is to have its nascent advertising business bolstered by Yahoo’s large and established infrastructure, said sources.
Yahoo offers mammoth 1.1 billion for Tumblr (photo credit:mashable)
Yahoo has been working on this kind of a deal with Tumblr for the last six weeks with thoughts centering on an outright acquisition. The clear point which Yahoo CEO Marissa Mayer makes to rationalise this deal is to bring the younger audiences to Yahoo’s foyer, with the user-generated content that Tumblr is known and has grown for.
According to sources who spoke to AllThingsD.com, a lot of the research that the Internet Giant’s CEO has done showed that Yahoo needed new properties that would make the company relevant to the newer audiences. Another aspect that interested Mayer was Tumblr’s strong mobile usage among its audience. Although the platform launched as a desktop-based service, the mobile population has picked up Tumblr in the last few years, with ComScore charting a quarter of the service’s US visitors using mobile devices.
Yahoo, according to sources, is clear that it will continue the Tumblr brand. As a deal, getting Tumblr will have a lot of benefits. In the last six years, Tumblr has reportedly raised $125 million and is currently valued at $800 million. Investors who have helped raise funding for the platform include Spark Capital, Union Square Ventures, Sequoia Capital, Greylock Partners, Insight Venture Partners and the Chernin Group.
Additionally, Tumblr will definitely be able to bring Yahoo a large portion of the young audiences. According to reports by comScore, the worldwide traffic for Tumblr stood at 117 million visitors in April this year. Tumblr also claims to have107.8 million blogs and 50.6 billion posts.
While Tumblr has been unwilling to have much advertising in the past, in the last year or so, the platform has begun promoting brands and Tumblr pages as well on user’s dashboards. Tumblr has said that it was able to generate revenues of $13 million last year. With the reach that Tumblr has, it is clear that Yahoo sees it fit for its vision to appeal to the younger generation.
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