The sale does not include Yahoo’s cash, its shares in Alibaba or shares in Yahoo Japan among others. These assets will continue to be held by Yahoo, which will change its name at closing and become a registered, publicly traded investment company.

Last year Verizon bought AOL and the company said Yahoo will now be integrated with it under executive vice-president of product innovation and new business, Marni Walden.

Lowell McAdam, chairman and CEO of Verizon said: “Just over a year ago we acquired AOL to enhance our strategy of providing a cross-screen connection for consumers, creators and advertisers. The acquisition of Yahoo will put Verizon in a highly competitive position as a top global mobile media company, and help accelerate our revenue stream in digital advertising.”

Marissa Mayer, CEO of Yahoo, said: “Yahoo will continue to change the world through this combination with Verizon and AOL. 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. It is also a great opportunity for Yahoo to build further distribution and accelerate our work in mobile, video, native advertising and social.”

Yahoo has a global audience of more than one billion monthly active users, including 600m monthly active mobile users, through its search, communications and digital content products.

The deal is subject to approval by Yahoo’s shareholders and regulators and is expected to be finalised by the beginning of 2017. Until then, Yahoo will continue to operate independently.