That plan was for Yahoo's assets and liabilities, other than the Alibaba stake, to be transferred to a newly formed company.
Verizon won the Yahoo bidding after a five-month auction.
Yahoo generated $2.83 billion in net digital ad revenues worldwide a year ago, according to eMarketer data, claiming 1.5 percent of the global market.
Despite Yahoo's troubles, its operations are attractive to Verizon because the wireless carrier is looking to capitalize on the growing number of people living their digital lives on smartphones.
Mayer believes Yahoo can still come back now it it's about to join a bigger company in Verizon.
More major layoffs at Yahoo as a result of its merger with Verizon aren't expected, at least not this year.
The Verizon deal would transform Yahoo into a holding company, with a 15 per cent stake in Chinese e-commerce company Alibaba Group Holding Ltd and a 35.5 per cent interest in Yahoo Japan Corp as well as Yahoo's convertible notes, certain minority investments and Yahoo's noncore patents. "Among the many entities that showed interest in Yahoo, Verizon believed most in the vast value we've created, and in what a combination could bring our users, our advertisers, and our partners".
The sale puts an end to Yahoo's 21-year history as an independent company.
The purchase of Yahoo's operations will boost Verizon's AOL internet business, which it bought past year for $4.4 billion, and give it access to Yahoo's ad technology tools, BrightRoll and Flurry, and assets such as search, mail and messenger. Mayer has already jettisoned 1,900 Yahoo workers since last September. They are worth about $US40 billion based on their market capitalisations, while Yahoo had a market value of about $US37.4 billion at Friday's close. Co-founders Jerry Yang and David Filo began building a web directory as Stanford University graduate students in 1994, and Yahoo quickly established itself as the online hub for tens of millions of people.
But Yahoo strayed from internet search in an attempt to build a multimedia business, clearing Google's path to supremacy. Yahoo attempted to buy Google and Facebook in those formative years, but it was rebuffed and then it was dwarfed by them. "Ad dollars are going to Google and Facebook and they're coming out of everyone else".
The deal brings to an end a lengthy sale process by Yahoo, an internet pioneer but recently a mere shadow of its former self though it still has one billion monthly users for its mail and news and sports content.
Until the deal closes, which is expected to happen in the first quarter of 2017, Yahoo will continue to operate independently, "offering and improving its own products and services for users, advertisers, developers and partners". We heard the two companies were closing in on deal last week, as Verizon was said to be in one-to-one talks with the internet company. She touted Verizon's potential to "accelerate our revenue stream in digital advertising" and repeatedly said she was "excited" for the future.
Yahoo's stock fell 92 cents to $38.47 in early trading Monday.