Verizon executives are facing a hefty dose of buyer's remorse.
Craig Silliman, Verizon's general counsel, told reporters on Thursday that the company has "a reasonable basis" to suspect that Yahoo's massive security breach could have a meaningful financial impact on the deal, according to multiple reports.
A story from the New York Post last week alleged that Verizon was interested in a $1 billion discount. Yahoo's stock dipped after Silliman's remarks and was down almost 2% in late trading Thursday.
Verizon hasn't definitively concluded that there was a material impact and is still waiting for Yahoo to complete its investigation into the situation, said the person, who asked not to be identified discussing private information.
Although the acquisition was already announced, Verizon may be able to make the claim that Yahoo did not disclose its knowledge of the hacks. Learn how Alibaba has earned a highest-possible IBD Composite Rating of 99, at Stock Checkup.
Yahoo last month announced the hack in late 2014 affecting some 500 million users worldwide, a fresh blow to the faded internet star. Analysts say one key for Verizon will be how many email users cancel their accounts as a result of the disclosure. "If they believe that it's not then they'll need to show us that", he said, declining to comment on whether talks are under way to renegotiate the purchase price.
Verizon's lawyers said that there is a "reasonable basis" for them to withdraw from the deal, which has yet to close.
Interestingly, Yahoo CEO Lowell McAdam speaking earlier this week at a tech conference in San Francisco seemed optimistic about the deal.
McAdam said the logic behind the merger still made sense and he was impressed with Yahoo's team, the Journal said. Asked if Verizon became aware of the reports on August 1, a Verizon spokesperson last month declined to comment to IBD.