Yahoo is mulling over a $1 billion buyout acquisition deal of New York-based Tumblr, according to reports.
All Things D first reported the rumors of a Yahoo investment in Tumblr, and Adweek followed up citing sources of its own. Ironically, $1 billion is said to be the valuation Tumblr was going to get at its next funding round.
Yahoo has been working to capture younger users - the same 18- to 24-year-olds that make up Tumblr's core user base. Yahoo CFO Ken Goldman recently noted that one of the company's challenges has been its aging demographic, writes All Things D.
"If you could pick a company that fits in with what Marissa Mayer has demonstrated in her career - aesthetics software technology and fast-growing - you could not land on a better choice," a source told AllThingsD.
Adweek notes that the deal could also be just what the microblogging service is looking for, pointing to investors' hopes for a big cashout, and Yahoo's huge ad sales team, which could help Tumblr scale up revenues.
Tumblr's investors include Union Square Ventures, Sequoia Capital, Greylock Partners, Insight Venture Partners, The Chernin Group, Spark Capital, and CrunchFund.
Tumblr has raised $125 million in funding to date at a reported valuation of $800 million, according to Venture Beat.
