Verizon Communications said it would buy Yahoo Inc's core business for $4.48bn, lowering its original offer by $350m in the wake of two massive cyber attacks at the internet company.
The closing of the deal, which was first announced in July, had been delayed as the companies assessed the fallout from the data breaches that Yahoo disclosed last year.
The No. 1 US wireless carrier had been trying to persuade Yahoo to amend the terms of the agreement following the attacks.
The deal will combine Yahoo's search, email and messenger assets as well as advertising technology tools with Verizon's AOL unit.
Verizon has been looking to mobile video and advertising for new sources of revenue outside the oversaturated wireless market.
The companies said on Tuesday they expect the deal to close in the second quarter.
Verizon's shares rose 0.6pc to $49.50 in early trading, while Yahoo's shares were up 0.3pc at $45.25.
Under the amended terms, Yahoo and Verizon will split cash liabilities related to some government investigations and third-party litigation related to the breaches.
Yahoo, however, will continue to be responsible for liabilities from shareholder lawsuits and SEC investigations.
"The amended terms of the agreement provide a fair and favorable outcome for shareholders," Marni Walden, head of product innovation and new business at Verizon, said in a statement.
Yahoo said in December that it had uncovered a massive cyber attack, where data from more than 1 billion user accounts was compromised in August 2013, making it the largest breach in history.
This followed the company's disclosure in September that at least 500 million accounts were affected in another breach in 2014.