Yahoo (NASDAQ:YHOO) appears to have added another arrow to its social media quiver by purchasing the microblogging platform Tumblr. The $1.1 billion acquisition has just been approved by Yahoo’s board according to anonymous sources via the Wall Street Journal. Tumblr’s board approved the deal yesterday, reports Forbes.
Marissa Mayer, who has run Yahoo since leaving Google (NASDAQ:GOOG) last year, engineered this latest acquisition after becoming interested in the social media startup several months ago. Founded in 2007, Tumblr has rocketed in popularity with its unique blend of blogging and social networking. The company only recently added advertising to its service last year which has so far generated $13 million in revenue.
Tumblr has recently seen its user base double from 58 million unique users in 2012 to 117 million users this March according to statistics from comScore (NASDAQ:SCOR). Meanwhile, Tumblr’s smartphone user base has tripled from 4 million users in 2012 to 12 million unique users this year. This would add significantly to Yahoo’s smartphone user base which is already around 84 million…
Interestingly, Yahoo’s purchase of Tumblr is all in cash. Typically, acquisitions of this magnitude involve a significant stock component. For example, Facebook’s (NASDAQ:FB) $1 billion purchase of Instagram was comprised of only $300 million in cash while the rest in of the value was offered in company shares. David Karp is the mastermind behind Tumblr.
Here’s how Yahoo has traded over the past week:
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