Yahoo is on the brink of acquiring Tumblr for $1.1 billion in cash, according to a new report. All Things D, which first broke the news that a deal was in the works, says Yahoo's board will meet on Sunday to consider an all-cash offer for the popular blogging platform. The deal would be Yahoo CEO Marissa Mayer's largest to date and would reportedly form the centerpiece of her effort to revitalize the company by acquiring younger users.
News of the potential deal surfaced hours after Yahoo invited the press to a special event Monday in New York City. But the company gave no hint as to what it would be announcing, saying only, "Join us as we share something special." Bloomberg reported that the event would include an update on Flickr.
Yahoo has been on an acquisition spree as of late, scooping up startups including Summly and Astrid. But those deals have been relatively small. The Tumblr deal would be exponentially larger — even more expensive than Facebook's acquisition of Instagram, which ultimately cost $715 million in cash and stock.
Since she was named Yahoo's CEO in July, Mayer's fans and critics alike have watched with interest as she attempts to turn around the long-suffering company. If the Tumblr deal happens, this will be her biggest bet to date — the kind of home-run swing Yahoo hasn't attempted since its ill-fated acquisitions of Geocities and Broadcast.com early in the last decade. Tumblr has the web traffic and the social currency to bring Yahoo an immediate boost in relevance. But whether its still-developing business model could produce a significant boost in revenue remains very much in question.
Update: TechCrunch is now reporting that Tumblr feels the $1.1 billion bid may actually be too low, and that the company considers it "only a first offer." According to TechCrunch's sources, if the offer doesn't meet Tumblr's standards it would provide the company the opportunity to shop itself around to other interested parties — including Facebook and Microsoft.