Tech

Yahoo's Board Approves $1.1 Billion Tumblr Buy

By Michael Mayday , May 20, 2013 09:05 AM EDT

Yahoo's Board of Directors has reportedly approved of a $1.1 billion cash acquisition for the social microblogging site, Tumblr. The approval took place over the phone on Friday, May 17.

The question now is if Tumblr accept Yahoo's offer.

The young company, popular with the coveted 18 to 24-year-old crowd, is apparently wanting more from Yahoo, reports TechCrunch. If Yahoo's offer is too low, the company could try to court other major tech entities like Microsoft or Facebook.

That, however, is a situation Yahoo does not want. The company desperately wants to tap into Tumblr's youthful demographic in an effort to turn the company's fortunes around.

"If Yahoo successfully buys the startup, it could inject some much-needed 'cool,' youthful energy, and design sense into the aging tech giant," TechCrunch's Josh Constine said. "That's why Tumblr may not necessarily be worth more than $1.1 billion, but it's worth more than that to Yahoo."

And Tumblr may not be in a position to pass up Yahoo's offer. The young company, formed in 2007, is running low on cash, burning through $85 million in two years, and only has enough money to last the company only a few months, according to TechCrunch. The service does have an ad platform, pulling in $13 million in 2012, but the site has set its 2013 goal $100 million. A goal it's not meeting.

Anonymous sources familiar with the situation tell The Wall Street Journal that, if the microblogging site approves of the deal, Tumblr will remain largely an independent business, operating under Yahoo's umbrella.

Then there's the element of Yahoo reportedly offering purely cash.

As Alex Wilhelm of The Next Web reports, the company is likely offering cash to make the deal more enticing to Tumblr. After all, Facebook's $1 billion purchase of Instagram ended up being worth $715 million after Facebook's stock fell.

Yahoo has been on an acquisition spree since CEO Marissa Mayer joined the company in 2012. Most purchases were limited to smaller firms for engineering talent, but the company has also approached major organization as well.

Earlier this year, the company reportedly offered $200 million to buy a controlling stake in the French video website Dailymotion. That deal, however, fell through after the French government objected to a foreign entity controlling the company.

New York-based Tumblr, however, has no such concerns. The company, founded in 2007 has 117 million unique users across the world. The site also touts another 12 million unique mobile visitors, The Wall Street Journal reports.

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