Yahoo! Chief executive Marissa Mayer. Steve Jennings/Getty Images

SAN FRANCISCO (Diya TV) — While in the midst of finalizing its sale to Verizon, recent stories that have come to light regarding Yahoo’s security from hacking and spying could cause a deep drop in the final sale price.

A story from the New York Post alleges that Verizon is now asking Yahoo for a hefty $1 billion discount to finalize what was supposed to be a $4.8 billion deal.

“The key will be what was actually disclosed by Yahoo before signing,” Frank Aquila, legendary M&A lawyer and partner at Sullivan & Cromwell said. “No one should be surprised that Verizon wants a significant reduction.”

Yahoo confirmed in September that it had suffered a data breach affecting at least 500 million users. Information including names, email addresses, birthdates, encrypted passwords, and both encrypted and decrypted answers to security questions were stolen in the breach, which Yahoo blamed on a state-sponsored attacker. Although the stolen passwords were encrypted, the additional information could easily be reused across other websites in identity theft schemes.

The breach occurred in 2014, but Yahoo discovered the intrusion more recently. The exact timing of Yahoo’s discovery could impact the Verizon deal. Chief executive Marissa Mayer reportedly learned of the breach as early as July, when the sale of the company was still being negotiated. In August, Yahoo said in a statement that it was aware of rumors that the company had been hit by hackers and that its security team was investigating. But in a September proxy statement made as part of the sale, Yahoo claimed that there had been no third-party claims of such a breach.

Senator Mark Warner has called for the Securities and Exchange Commission to investigate Yahoo’s representations about cybersecurity. “Yahoo’s September filing asserting lack of knowledge of security incidents involving its IT systems creates serious concerns about truthfulness in representations to the public,” Warner said in a statement.

Public investors have a right to know about significant events affecting the company, and it can easily be argued that these security breaches count. Verizon could make the case that these incidences hurt the value of the Yahoo brand and thus their stock.

When asked about the hack in a televised interview with CNBC last week, AOL’s Tim Armstrong said “the data thing was something new that got introduced and we’ll work through that together with” Yahoo. He added that he wants to be “protective” of the Verizon shareholders.

After ongoing rumors, the acquisition was formally announced in July. Deals like these typically take several months to close.