Yahoo’s board approved the plan for the company to acquire Tumblr for $1.1 billion, the Wall Street Journal reports. The deal will be in all cash.
Additionally, previous reports said that Tumblr’s board had given the green light to Yahoo acquiring the company, so as of right now it looks like it’s a done deal.
To date, Tumblr has been anything but a cash cow, in fact, David Karp, founder and CEO of Tumblr only recently started to monetize the blogging social network. While Tumblr has just $13 million in revenue right now, it should be able to increase that revenue following the model of Twitter and Facebook. That may mean sponsored stories and other ad-based revenue models. Tumblr also has a theme marketplace where users can opt to purchase more unique designs for their blogs — another avenue for generating revenue I’m sure.
The Tumblr acquisition is going to be the defining acquisition of Marissa Mayer’s time as Yahoo CEO. It will either end really well for her, or turn into a complete disaster.
What do you think of the acquisition?
Update: Marissa Mayer has officially announced the Tumblr acquisition on her first Tumblr blog post where she writes, “I’m delighted to announce that we’ve reached an agreement to acquire Tumblr! We promise not to screw it up. Tumblr is incredibly special and has a great thing going. We will operate Tumblr independently. David Karp will remain CEO.”