Yahoo! Inc said on Monday that it is is acquiring blogging service Tumblr for $1.1 billion cash while sources said it was preparing to unveil updates to the company’s Flickr photo-sharing site.
Yahoo! Chief Executive Officer Marissa Mayer will detail changes to Flickr at a press event in New York, according to a person familiar with the matter, who asked not to be identified because the information is private.
The deal, which will use about a fifth of Yahoo’s $5.4 billion in cash and marketable securities, is the largest by far since Mayer took the reins in July seeking to reverse a multi-year decline in Yahoo’s business and web traffic.
“Per the agreement and our promise not to screw it up, Tumblr will be independently operated as a separate business,” Yahoo! said in a statement on Monday.
Mayer has been tweaking Yahoo!’s services and adding features designed to win back users and advertisers who have fled the web portal in favour of competing sites such as Facebook Inc and Google Inc. Improvements to Flickr in December helped Yahoo! top 300 million monthly mobile users, up from just 200 million at the end of the last year. An acquisition of Tumblr would add a social network of 108 million blogs that’s popular with a younger audience.
Tumblr is one of the web’s most popular hubs of so-called user-generated content. The deal will provide Yahoo! with a much-needed platform in social media to reach a younger generation of users less tied to Yahoo!’s traditional web portal and e-mail services.
Analysts, contacted after the deal was reported on Sunday by the online publication All Things D, said Yahoo! was paying a hefty premium.
Media reports have pegged Tumblr’s 2012 revenue at $13 million. The privately held company, based in Manhattan, does not disclose its financial results.