Yahoo to Pay $1.1 Billion for Tumblr

In a bid to revitalize its offerings and attract younger
users, Yahoo has agreed to acquire Tumblr for about $1.1 billion.

The deal is expected to close in second half of 2013.

The move to acquire the micro-blogging and social networking
platform would strengthen Yahoo's mobile presence and provide it with a fast
growing new audience.

In recent months, Yahoo executives have repeatedly stressed
the importance of attracting younger users and improving their products if they
want to speed up their growth, which has lagged significantly behind the rest
of the industry.

Tumblr currently has more than 300 million monthly unique
visitors, with 120,000 signups every day. The platform gets about 900 posts per
second and 24 billion minutes spent on site each month, according to the
companies.

On mobile, more than half of Tumblr's users use its mobile
app, with an average of seven sessions per day.

The combination is expected to grow Yahoo's audience by 50% to
more than a billion monthly visitors, and to grow traffic by approximately 20%.

As part of the agreement, Tumblr will be independently
operated as a separate business and David Karp will remain CEO.

The deal would strengthen Yahoo's mobile presence and at the
same time allow Tumblr to tap into Yahoo's advertising infrastructure and
better monetize its offerings.

"Tumblr is redefining creative expression online,"
said Yahoo CEO Marissa Mayer in a statement. "On many levels, Tumblr and
Yahoo couldn't be more different, but, at the same time, they couldn't be more
complementary. Yahoo is the Internet's original media network. Tumblr is the
Internet's fastest-growing media frenzy. Both companies are homes for brands --
established and emerging. And, fundamentally, Tumblr and Yahoo are both all
about users, design, and finding surprise and inspiration amidst the
everyday."

In announcing the deal, David Karp, CEO of
Tumblr explained in a statement that "Our team isn't changing. Our roadmap isn't
changing. And our mission -- to empower creators to make their best work and
get it in front of the audience they deserve -- certainly isn't changing. But
we're elated to have the support of Yahoo! and their team who share our dream
to make the Internet the ultimate creative canvas. Tumblr gets better faster
with more resources to draw from."