A match made in cyberspace? Yahoo! set to buy Tumblr for $1.1bn

 

Not quite a year after arriving at Yahoo! from Google, chief executive Marissa Mayer has apparently persuaded her board to approve the purchase of Tumblr – the go-to website for legions of young bloggers and internet sharers – for $1.1bn in cash, despite it making just $13m in sales last year.

The move, which will give Yahoo! a greater presence in social networking, will also make one more very young Silicon Valley tycoon out of David Karp. Now 26, Mr Karp launched Tumblr from his mother’s New York apartment in 2007. He had hitherto resisted approaches by potential buyers.

Details of the deal, The Wall Street Journal reported last night, will be unveiled by Yahoo! today. It is likely that Tumblr, which has about 100 million users and provides a platform for roughly 90 million posts every day, will continue to operate as a separate entity, presumably with Mr Karp at the tiller for the foreseeable future.

The purchase, if confirmed, represents a gamble for both sides. Ms Mayer, poached from Google last July, is betting that Tumblr has a long way to go, in accumulating followers and finding ways to generate income. Mr Karp, meanwhile, has presumably calculated he can’t take Tumblr much further without the juice from an internet giant such as Yahoo!.

Ms Mayer has stirred occasional controversy at her new place of work, banning her employees from working from home and curtailing her own maternity leave and bringing her infant to her office. She has long indicated that she means to grow Yahoo! in part through a strategy of acquisitions, of which Tumblr would be the biggest and boldest so far.

Though he is now promised outsized personal wealth, Mr Karp is not yet quite in the Mark Zuckerberg league. Exactly how much he will make is not known because he has investors with undisclosed stakes who will share the Yahoo! proceeds with him. He is known to have sold 25 per cent in 2008.

Yahoo has 700 million customers worldwide and employs 11,500 people in 26 countries, including the UK where it has an office in London. Its services include a search engine and an email client called Yahoo! Mail.

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