Verizon Communications Inc said it has a “reasonable basis” to believe Yahoo Inc’s massive data breach of email accounts represents a material impact that could allow Verizon to withdraw from its $4.83 billion deal to buy the technology company.
Verizon’s general counsel Craig Silliman told reporters at a roundtable in Washington the data breach could trigger a clause in the deal that would allow the U.S. wireless company not to complete it. The deal has a clause that says Verizon can withdraw if a new event “reasonably can be expected to have a material adverse effect on the business, assets, properties, results of operation or financial condition of the business.”
Silliman said the U.S. Federal Trade Commission has approved Verizon’s planned acquisition of Yahoo, but it still needs approval from the European Commission and the U.S. Securities and Exchange Commission is reviewing the proxy.
Verizon has had preliminary briefings from Yahoo but it still needs “significant information” from the company before it makes a final decision on the materiality of the hacking of at least 500 million email accounts, Silliman said. He said Verizon is “absolutely evaluating (the breach) and will make determinations about whether and how to move forward with the deal based on our evaluation of the materiality.”
Yahoo shares ended 1.75 percent lower at $41.62, while Verizon was largely unchanged, closing at $50.29, down 0.02 percent.
Yahoo in September disclosed that it had fallen victim to a data breach in 2014 that compromised users’ names, email addresses, telephone numbers, dates of birth and encrypted passwords.