Mergers: Verizon acquring Yahoo internet core, YHOO worth $39-43

Accuracy score :
97%

Verizon acquisition of Yahoo's core internet business

Verizon acquired Yahoo's core internet business for about $4.83 billion in cash, Verizon’s acquisition is of “core” Yahoo, which includes search, email, advertising products and the media business (including Yahoo Finance). Part of Yahoo will remain after the deal: Yahoo is keeping its stakes in the Chinese internet giant Alibaba and in Yahoo Japan (15% stake in Alibaba and 35% stake in Yahoo Japan). Yahoo had initially attempted to spin off its Alibaba stake, but the move was abandoned over fears that the company would incur a hefty tax bill. Yahoo will also retain its cash, noncore patents (called the Excalibur portfolio), convertible notes, and other minority investments.

When the deal closes, that part of Yahoo will change its name and become a publicly traded investment company. The company says it intends to return "substantially all" of its net cash to shareholders. The deal is subject to customary closing conditions, approval by Yahoo’s shareholders, and regulatory approvals, and is expected to close in Q1 of 2017. Until the closing, Yahoo will continue to operate independently, offering and improving its own products and services for users, advertisers, developers and partners.

The Yahoo deal, however, is not a sale of the public company. It is an asset sale, in which there is only a shareholder vote if there is a sale of “all” or “substantially all” of the assets of the company. If another bidder still wants to acquire Yahoo, it has time. The agreement with Verizon allows Yahoo to terminate the deal and accept a superior offer by paying a $144 million breakup fee to Verizon. And if Yahoo shareholders change their minds and want to stick with Yahoo’s chief executive, Marissa Mayer, and vote down the deal, there is a so-called naked no-vote termination fee of $15 million payable to Verizon to reimburse expenses.

Yahoo is worth after Verizon’s acquisition of Yahoo's core internet business

  • Part of Yahoo will remain after the deal: Yahoo is keeping its stakes in the Chinese internet giant Alibaba and in Yahoo Japan
  • Yahoo will also retain its cash, noncore patents (called the Excalibur portfolio), convertible notes, and other minority investments
  • 15% stake in Alibaba is worth 33.3 billion USD, 35% stake in Yahoo Japan is worth 7.8 billion USD (Yahoo Japan Corp ADR YAHOY, current market cap. is 23.3 billion USD)
  • Cash on account (1.32 billion USD), short term investments, convertible notes, and other minority investments - debt (3.5 billion USD)
  • Yahoo Inc.'s patents are worth more than 1 billion USD (3,000 patents called the Excalibur portfolio)
  • 4.83 billion USD in cash from Verizon’s acquisition
  • 983M outstanding shares

 

Total = 51.75 billion usd

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