Another Yahoo breach and investors are rattled

Yahoo shares slid Thursday on worries that Verizon will walk away or slash its $4.8 billion offer for the company’s digital operations after another massive data breach.

Yahoo revealed on Wednesday that information was stolen from more than 1 billion user accounts in 2013 after disclosing a separate hack in 2014 of some 500 million accounts in September.

Verizon had said it would reevaluate the Yahoo deal after the first hack, and said the same Wednesday after the latest revelation. Verizon spokesman Bob Varettoni on Thursday declined to comment beyond the company’s Wednesday-night statement. Yahoo said in a statement it was confident in its value and continuing to work on its integration with Verizon.

The deal was expected to close by March 2017.

If the hacks drive Yahoo’s users away, the company wouldn’t be as valuable to the telecom giant in its quest to build a digital-ad business that could rival industry giants Google and Facebook.

Yahoo has said that the September announcement of the 2014 hack didn’t hurt traffic to its services.

The second hack “clearly ups the ante” that Verizon may try to abandon the Yahoo purchase or lower its price, said CFRA Research analyst Scott Kessler.

But if Yahoo doesn’t agree, Verizon might not have the legal grounds to do so under the terms of its deal, he said. There would have to be significant damage to the value of Yahoo’s business, like if it caused many users to deactivate their accounts, and that’s not yet clear, he said.

“If you’re looking to buy a house and enter into a contract, and then you find something out that makes you want to reduce your offer, that’s not necessarily as easy to do as it is to say,” he said. “Everyone wants a better deal. Whether or not it’s legally supported or possible I think is still unclear.”

If Yahoo and Verizon can’t agree on whether to end the deal or lower its price, there would be a court battle, said Craig Newman, a lawyer with Patterson Belknap who specializes in cybersecurity. That has risks for both sides. A case like Verizon’s historically has been difficult to win, he said, but a trial could also mean a lot of pointed, embarrassing questions for Yahoo about “who was watching the store” on data security.

Yahoo shares fell $2.23, or 5.5 percent, to $38.68 in afternoon trading. Verizon shares rose 21 cents to $51.84.