Last Updated Jul 25, 2016 8:39 AM EDT
The sale announced Monday marks the second time in two years that Verizon has snapped up the remains of a fallen internet star as it broadens its digital reach. The nation's largest wireless carrier paid $4.4 billion for AOL last year.
Verizon won the bidding war for Yahoo's operating business after a five-month auction.
According to Verizon, the Yahoo assets it is acquiring will be integrated with AOL.
Yahoo Inc. is parting with its email service and websites devoted to news, finance and sports in addition to its advertising tools under pressure from shareholders fed up with a steep downturn in the company's revenue during the past eight years.
Here's what's not part of the Verizon purchase: Yahoo's cash holdings, its stake in Alibaba, Yahoo Japan shares, convertible note, some minority investment and Yahoo's "non-core patents."
According to Verizon, those assets will be held by Yahoo, which will change its name once the deal closes and become a publicly traded investment company.
Yahoo CEO Marissa Mayer tried to put an upbeat spin on the deal, saying, " The sale of our operating business, which effectively separates our Asian asset equity stakes, is an important step in our plan to unlock shareholder value for Yahoo. This transaction also sets up a great opportunity for Yahoo to build further distribution and accelerate our work in mobile, video, native advertising and social."
In a message to employees posted on Tumblr, Mayer hinted at her future, writing, "I'm incredibly proud of everything that we've achieved, and I'm incredibly proud of our team. For me personally, I'm planning to stay. I love Yahoo, and I believe in all of you. It's important to me to see Yahoo into its next chapter."
The Verizon deal is expected to close in 2017's first quarter.