Yahoo is buying online blogging forum Tumblr for $1.1 billion as CEO Marissa Mayer tries to rejuvenate an Internet icon that had fallen behind the times.
The deal announced Monday represents Mayer’s boldest move yet since she left Google 10 months ago to lead Yahoo’s latest comeback attempt. It marks Yahoo’s most expensive acquisition since the Sunnyvale, Calif., company bought online search engine Overture a decade ago for $1.3 billion in cash and stock.
Yahoo is paying all cash for Tumblr, dipping into some of its remaining stash from a $7.6 billion windfall reaped last year from selling about half of its stake in Chinese Internet company Alibaba Holdings Group. Taking over Tumblr will devour about one-fifth of the $5.4 billion in cash that Yahoo had in its accounts at the end of March.
While hailing Tumblr as fount of creativity that attracts 300 million visitors per month, Yahoo pledged “not to screw it up.” David Karp, a high school dropout who started Tumblr six years ago, will remain in control of the service in an effort to retain the same “irreverence, wit and commitment to empower creators,” Yahoo said.
Karp, 26, who may now have a managerial mentor in Mayer, 37. Tumblr, which will remain based in New York, has about 175 employees while Yahoo has 11,300 workers.
Mayer, who worked closely with Google co-founders Larry Page and Sergey Brin, had high praise for Karp in a statement. She described him “as one of the most perceptive, capable entrepreneurs I’ve ever worked with.”
In his statement, Karp predicted Yahoo would help Tumblr grow even faster as he strives “to make the Internet the ultimate creative canvas. ”
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