The closing of the deal, which was first announced in July, had been delayed as the companies assessed the fallout from two data breaches that Yahoo disclosed last year.
The No 1 US mobile phone operator had been trying to persuade Yahoo to amend the terms of the agreement following the attacks. As part of the revised deal, Yahoo and Verizon will share some liabilities arising from the hacks.
The deal brings to Verizon Yahoo’s more than 1bn users and a wealth of data it can use to offer more targeted advertising. Verizon will combine Yahoo’s advertising technology tools as well as its search, email, and messenger assets with its AOL unit, purchased for $4.4bn in 2015.
The revised agreement comes as Verizon and its main rival, AT&T, try to find new ways to grow in an oversaturated market for wireless services. AT&T has proposed an $85.4bn takeover of Time Warner to boost its content offerings to subscribers. Time Warner is the parent of cable channels HBO and CNN, as well as film studio Warner Bros.
The combined Yahoo and AOL businesses will help diversify Verizon away from its core mobile phone business, according to Jennifer Fritzsche, an analyst at Wells Fargo, but “we would note its digital media and advertising business would still be a small percentage of revenues”.
Shares in both Verizon and Yahoo rose slightly at one stage yesterday. Verizon and Yahoo expect the deal to close in the second quarter.
Under the amended terms, Yahoo and Verizon will split cash liabilities related to some government investigations and third-party litigation related to the breaches.
Yahoo, however, will continue to be responsible for liabilities from shareholder lawsuits and US Securities and Exchange Commission investigations.
“This is especially positive in our view, as it should limit [Verizon’s] future liability here,” said Ms Fritzsche.
Yahoo said in December that data from more than 1bn user accounts was compromised in August 2013, making it the largest breach in history.
This followed the company’s disclosure in September that at least 500m accounts were affected in another breach in 2014.