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Yahoo Acquires Tumblr For $1.1B In All Cash Deal

UntitledAfter much speculation, Yahoo has finally announced that it will acquire Tumblr, the blogging platform, for $1.1 Billion in an all cash deal. The transaction, which is subject to customary closing conditions, is expected to close in the second half of the year.

Note that Yahoo has been on acquisition spree since it hired Marissa Mayer to head the company. Typically all the companies hired under Mayer’s regime have been shut down right after the acquisition. However, Yahoo claims that as per the agreement, Tumblr will remain an independently operated as a separate business and Tumblr’s Founder David Karp will remain CEO of the company, although Karp’s lock-in period is not known. Karp, who supposedly owns 25% of the company shares will make $275 million from the deal.

Some Tumblr stats from the deal
– Tumblr receives about 300 million monthly unique visitors
– 120,000 signups every day.
– 900 posts per second on Tumblr
– Tumblr users spend 24 billion minutes spent on site each month.

Tumblr started monetizing only in May 2012 and reported revenues of about $13 million for that year.

What this brings to both the companies?

Tumblr can use Yahoo’s personalization technology and search infrastructure on its platform. In turn, Yahoo gets access to 50 Billion blog posts on Tumblr to monetize through its advertising network. Besides this, Tumblr acquisition also helps Yahoo to cater to more younger audience that Tumblr addresses.

Tumblr’s known for it’s topical and quirky blogs usually around a particular topic, and these tend to go viral. It’s quite popular – more popular than a similar service called Posterous which was acquired by twitter and is being shut down. No wonder, Yahoo CEO Marissa Mayer has promised Tumblr fans that they won’t shut it down, and more pertinently, won’t screw it up (ala Flickr).

Previous acquisitions: Yahoo acquired Snip.itAlike, and Jybe, and also acquired Summly, a company that creates summaries of news articles. It had also noted that Yahoo acquired Summly’s technology and intellectual property which is plans to integrate across its mobile offerings.

We’ll update the post with more information from the conference call later tonight.

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