Yahoo is acquiring blogging service Tumblr for $1.1 billion, according to a Reuters report, which called the deal a “bold bet by Yahoo Chief Executive Marissa Mayer to revitalize the company by co-opting a Web property with strong visitor traffic but little revenue.” According to Reuters:
The combination of Yahoo and Tumblr creates an online powerhouse with roughly one billion users, which will draw in more advertisers and help Yahoo keep visitors on its properties for longer periods of time, Mayer told Reuters in an interview.
Analysts say Yahoo appeared to be overpaying for a business that has never posted a profit, makes a fraction of Yahoo’s sales, and may not contribute significantly to revenue for years. But the company, rebuffed by the French government when it tried to pay $1 billion for video site Dailymotion earlier this year, had to do something to plug a hole in its social media efforts.
Yahoo made clear it was sensitive to concerns that it might damage Tumblr by making it less irreverent or more corporate.
“Per the agreement and our promise not to screw it up, Tumblr will be independently operated as a separate business,” Yahoo said in a statement.
The deal will make Tumblr founder and CEO David Karp, 26, a multimillionaire.