Yahoo brand, for $4.83 billion in cash. Yahoo’s key assets include market-leading premium content brands in major categories including finance, news and sports, as well as a leading email service with approximately 225 million monthly users. Additional Yahoo technology assets in the advertising space include Brightroll, a programmatic demand-side platform; Flurry, an independent mobile apps analytics service; and Gemini, a native and search advertising solution. The transaction will create a new rival in mobile media technology reaching over 1 billion users, the companies said in a joint statement. “The acquisition of Yahoo will put Verizon in a highly competitive position as a top global mobile media company, and help accelerate our revenue stream in digital advertising,” said Verizon chairman and CEO Lowell McAdam. Verizon, which generated nearly $132 billion in 2015 revenues, and had a market capitalization of $228.68 billion as of July 22, will combine Yahoo with AOL, which it acquired last year for $4.4 billion, allowing it to compete more effectively with Google and Facebook. “Combining Verizon, AOL and Yahoo will create a new powerful competitive rival in mobile media, and an open, scaled alternative offering for advertisers and publishers,” said AOL CEO Tim Armstrong. 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. “The sale of our operating business, which effectively separates our Asian asset equity stakes, is an important step in our plan to unlock shareholder value for Yahoo,” said Yahoo CEO Marissa Meyer. The sale does not include Yahoo’s cash, its shares in Alibaba Group Holdings, its shares in Yahoo Japan, Yahoo’s convertible notes, certain minority investments, and Yahoo’s non-core patents (called the Excalibur portfolio). These assets will continue to be held by Yahoo, which will change its name at closing and become a registered, publicly traded investment company. Yahoo’s shares closed at $39.38 on July 22, giving the company a total market value of $37.37 billion. The erstwhile web pioneer’s market capitalization had peaked at about $125 billion in 2000, and fell in value ever since. LionTree Advisors LLC, Allen & Company LLC, Bank of America Merrill Lynch and Guggenheim Securities LLC are acting as financial advisors to Verizon. Wachtell, Lipton, Rosen & Katz, Gibson, Dunn & Crutcher LLP, Covington & Burling LLP and Winston & Strawn LLP are acting as legal advisors to Verizon. Goldman, Sachs & Co., J.P. Morgan Securities LLC and PJT Partners are acting as financial advisors to the Yahoo Board and its Strategic Review Committee. Skadden, Arps, Slate, Meagher & Flom LLP, Wilson Sonsini Goodrich & Rosati and Weil Gotshal & Manges LLP are acting as legal advisors to Yahoo. Cravath, Swaine & Moore LLP is independent legal advisor to Yahoo’s Strategic Review Committee. The deal finally came to fruition largely as a result of unrelenting pressure exerted by activist investor Starboard Value LP’s CEO Jeff Smith, whom Fortune once called, “the most feared man in corporate America these days.” Starboard started waging war against Yahoo, arguing that the company’s management and board “have repeatedly failed shareholders,” essentially forcing Yahoo to sell its core business.
In April 2016, Yahoo Finance itself reported that, “Yahoo’s new agreement with Starboard Value and its pugnacious CEO Jeff Smith is a peace treaty of sorts—and a step toward a sunnier sale of its core business.”“The company, which owns Yahoo Finance, will add four of Starboard’s picks to its board of directors, it announced on Wednesday. The new boardmembers are Tor Braham, a former Deutsche Bank exec, Eddy Hartenstein, who has worked at tech companies like Sirius XM and Broadcom and media companies like Tribune Company and Los Angeles Times Media, Richard Hill, of Tessera Technologies, and Starboard CEO Jeff Smith himself. Two existing Yahoo boardmembers, former Walmart CEO Lee Scott and former Ernst & Young exec Sue James, will not run for reelection. Four of Yahoo’s eleven directors will now be Starboard appointments,” further commented Yahoo Finance in April. Starboard Value LP is a New York-based investment adviser and activist hedge fund with a focused and fundamental approach to investing in publicly traded U.S. companies. Starboard invests in what it refers to as “deeply undervalued companies and actively engages with management teams and boards of directors to identify and execute on opportunities to unlock value for the benefit of all shareholders.” As of March 31, 2016, Starboard Value held 22 institutional investment positions with a total market value of $2.58 billion, according to its SEC 13-F filings, the largest of which was its stake in Yahoo Inc., consisting of roughly 12.3 million YHOO shares valued at $484 million. According to FactSet, through March 31, 2016 Starboard has waged 46 campaigns and gained a total of 66 board seats since its inception in 2011. Jeffrey Smith is the co-founder, chief executive and chief investment officer of Starboard, which was spun off in 2011 from hedge fund Ramius LLC, a subsidiary of the Cowen Group Inc. (NASDAQ: COWN) — whose chairman Peter A. Cohen, was the former vice chairman of Republic New York Corp. and former chairman and CEO of Shearson Lehman Brothers. Smith previously served as vice president and board member of his father’s company, the Fresh Juice Company, until it was reportedly sold for $20 million in 1998. He began his career in the M&A department at Société Générale, after graduating from the Wharton School of Business with a BS in Economics. Smith currently serves on the board of Yahoo! Inc., and is the chairman of Advance Auto Parts Inc. He was formerly chairman of Darden Restaurants Inc. and Phoenix Technologies Ltd., and formerly served on the boards of Quantum Corp., Office Depot Inc., Regis Corp., Surmodics Inc., Zoran Corp., Actel Corp., Kensey Nash Corp., and S1 Corp. Photo: Jeffrey Smith, Co-Founder, CEO & CIO of Starboard Value LP.]]>