Yahoo Inc said it is acquiring blogging service Tumblr for $1.1 billion cash, a bold bet by Chief Executive Marissa Mayer to revitalise the struggling Internet pioneer by co-opting a Web property with strong visitor traffic but little revenue.
The deal, which will use about a fifth of Yahoo's $5.4 billion in cash and marketable securities, is the largest by far since Mayer took the reins in July seeking to reverse a multi-year decline in Yahoo's business and Web traffic.
"Per the agreement and our promise not to screw it up, Tumblr will be independently operated as a separate business," Yahoo said in a statement on Monday.
David Karp, who founded Tumblr in 2007, will remain CEO.
Tumblr is one of the Web's most popular hubs of so-called user-generated content. The deal will provide Yahoo with a much-needed platform in social media to reach a younger generation of users less tied to Yahoo's traditional Web portal and email services.
Yahoo said the acquisition is expected to increase its audience by 50 per cent to more than a billion monthly visitors.
Image: Yahoo! President and CEO Marissa Mayer