VERIZON HAS ACQUIRED YAHOO FOR $4.8 BILLION

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Marissa Mayer

AP Photo/Lionel Cironneau, File

Yahoo CEO Marissa Mayer.

Verizon has acquired Yahoo's core internet business for $4.8 billion.

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The deal doubles Verizon's digital advertising business, to reach an estimated 4.5% share of the US internet advertising market, according to eMarketer. It will place Verizon in a distant third place, in terms of US digital ad market share, to Facebook (17%) and Google (36%).

A part of Yahoo still remains after the deal: Yahoo is keeping its stakes in Chinese internet giant Alibaba and Yahoo Japan, which have a combined value of $40 billion. Yahoo had initially attempted to spin off its Alibaba stake, but the move was abandoned over fears the company would incur a hefty tax bill.

The acquisition marks the final chapter in a rollercoaster story for Yahoo, which was founded in 1994 as one of the first web directories.

Once one of the leading internet media businesses, Yahoo's star began to fade over the past decade as it failed to keep up with rivals like Google and Facebook in the bid for consumer attention and advertiser spend.

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Marissa Mayer was hired from Google as Yahoo's CEO in 2012 in order to turn around the business. But her efforts failed to stem the company's revenue and profit declines and a group of investors, led by activist firm Starboard, pressured management to sell up.

Two years ago, AOL chief executive Tim Armstrong had proposed a merger with Yahoo, which Mayer had now rejected. Now Armstrong, who sold AOL to Verizon for $4.4 billion last year, has got his wish.

A Yahoo SEC filing shows Mayer is set to receive $54.9 million severance package once she leaves the company.

Verizon reports its second quarter earnings on Tuesday. Last week, Yahoo reported a 5% rise in revenue year-on-year to $1.31 billion in its second quarter, versus the $1.08 billion expected by analysts. The company's losses widened to $440 million in the period.

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