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Yahoo to potentially invest in Tumblr

An attractive acquisition

Yahoo is in preliminary yet serious discussions with Tumblr concerning a possible investment or acquisition, according to AllThingsD.

With a suggested value of $800 million (£525 million), Tumblr would not be a small purchase for the company, who would likely face a purchase price of close to $1 billion.

Since Marissa Mayer joined as the CEO, Yahoo has been focused on purchasing smaller companies such as Stamped, Alike and Jype in order to bring “great people” to Yahoo. However, the rumoured Tumblr acquisition and talks with Hulu suggest that Yahoo is looking at ways to further develop its profile.

A game-changing move for Mayer?

In the Q4 2012 earnings call, Marissa Mayer stated that Yahoo would make mobile a “mercurial” part of its business in the future. By paying close attention to expanding its mobile business, the company hope to draw in more users, potentially leading to a growth in revenue.

The possible acquisition of Tumblr could be a game-changing move for Yahoo, helping it to become the mobile-focused company it envisions for the future. As Tumblr has a younger and more mobile demographic, purchasing or investing in the company would be an attractive move for Yahoo as it looks to extend and engage its audience.

Natalie Booth, head of search at theEword, said: “While the acquisition of Tumblr would eat up around a quarter of the cash that Yahoo has to hand, gaining access to this demographic could prove valuable to Marissa Mayer, who has expressed her desire for Yahoo to become a mobile-first company.”

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