Yahoo Inc. is buying online blogging forum Tumblr for $1.1 billion.
The deal announced Monday represents Mayer’s boldest move yet since she left Google 10 months ago to lead Yahoo’s latest comeback attempt. It marks Yahoo’s most expensive acquisition since the Sunnyvale, Calif., company bought online search engine Overture a decade ago for $1.3 billion in cash and stock.
Yahoo is paying all cash for Tumblr, dipping into some of its remaining stash from a $7.6 billion windfall reaped last year from selling about half of its stake in Chinese Internet company Alibaba Holdings Group. Taking over Tumblr will devour about one-fifth of the $5.4 billion in cash Yahoo had in its accounts at the end of March.
Tumblr, a service started six years by David Karp, a high school dropout, now figures to play a pivotal role in Mayer’s attempt to reshape Yahoo. Tumblr will provide Yahoo with a captivating hook to reel in more traffic and advertisers on smartphones and tablet computers. That rapidly growing market is expected to become even more important during the next decade as people increasingly consume digital content on mobile devices instead of laptop and desktop machines. Tumblr will remain based in New York and led by Karp, 26, who may now have a mentor in Mayer, 37. The startup has about 175 employees.