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Tumblr officially off the market

Founder and CEO of Tumblr

Yahoo! board unanimously approves the acquisition...

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May 19, 2013 3:20 by



Latest Update: According to allthingsd.com – the source that first broke news of this potential acquisition – Yahoo’s board has unanimously agreed on the all-cash $1.1 billion acquisition of Tumblr and an official announcement is expected on Monday, citing sources close to the board.

In the same way that Instagram CEO Kevin Systrom maintains control of his application at Facebook, David Karp (Tumblr CEO) will stay at Yahoo! for at least four years, get a ‘windfall’ of cash and retain ‘a lot’ of control over the service. The upside? Yahoo intends to bring years of experience and established infrastructure to Tumblr’s relatively nascent advertising model.

Since Marissa Mayer took over as Yahoo’s CEO last summer, this has been her largest acquisition yet.

 

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Yahoo needs to be cool again. It needs a younger target audience – preferably one between 18 and 24 years old. It needs to invest more in marketing and become more ‘visibly’ trendy. And one of its main lingering challenges? Its aging demographic.

Kipp is slightly paraphrasing; these aren’t our words. Earlier this week, at JP Morgan’s Global Technology conference, Yahoo’s CFO, Ken Goldman, explicitly highlighted the company’s challenges and its need to slightly shake things up again. As it turns out, Yahoo’s possible $1.1 billion acquisition of Tumblr – a blogging platform founded by the now 26-year-old David Karp in 2007, with more than 86 million blogs – may serve as their path to ‘coolness’.

And why wouldn’t it? According to analysts, the site has the ’18- to-24-year-old sweet spot’ demographic, along with high levels of credibility among its users. The real question isn’t necessarily whether this move would be good for Yahoo, rather, would it be beneficial for Tumblr’s repertoire in the long run.

Whenever a billion-dollar tech acquisition is imminent, both excitement and heavy criticism are bound to follow. Countless reports have suggested that Yahoo’s board meeting on Sunday evening will decide whether the take-over is the right move for Yahoo!.

Interestingly enough, on the other end of the spectrum, are reports – or rather speculation – about the invasion of an outsider. Quite similarly to how Facebook ‘stole’ the acquisition of Instagram away from Twitter in 2012, rumours suggest that the social network will, could or should swoop in again and place a higher bid for Tumblr.

According to the Business Insider, it is very unlikely. Apparently, the notion that someone within the Tumblr team purposely sparked rumours of this so-called ‘auction’ to try and drive up the acquisition price was a believable one – until they were told that no such auction or offer will be made.

There are a few outcomes to tonight’s meeting. Either Yahoo’s Marissa Mayer will decide that acquiring Tumblr isn’t worth a billion dollars and that a strategic partnership, rather than a full-blown acquisition, would serve them well. On the other hand, Karp could also just as easily raise the price of his company drastically and not accept a penny under – or decide that he’d no longer like to sell it.

Either way, nothing is certain yet, and the fact that Facebook hasn’t yet made a public offer does not mean they won’t. At this point, it’s improbable but not impossible.

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