Shareholders vote to OK Yahoo deal with Verizon
Yahoo shareholders voted at a brief meeting Thursday to sell the company’s Internet properties for $4.48 billion, closing a chapter on one of Silicon Valley’s pioneering tech companies.
After the deal closes — which is expected on Tuesday — Yahoo’s Web services will combine with Verizon’s AOL division. As a result, 2,100 people, 15 percent of the roughly 14,000 employees at the companies, will be laid off, according to a person familiar with the matter who asked for anonymity because affected workers have not been notified.
AOL spokeswoman Caroline Campbell said that the combined companies, which will be known as Oath, will have access to more than 1 billion people.
Owners of Yahoo stock will become shareholders of Altaba Inc., a new holding company that will oversee Yahoo’s investments in Chinese e-commerce giant Alibaba and tech firm
Yahoo Japan, as well as a portfolio of patents.
“There’s been so many changes here,” said shareholder Jean Stables, who has owned Yahoo stock for two decades, since it was a popular portal to the Internet. “It’s more important that they keep the properties going than whatever they are called,” she added.
For several shareholders at the Santa Clara Marriott session Thursday, selling Yahoo’s Internet properties, which include Yahoo Mail, News and Sports, seemed inevitable. The company has tried to reinvent itself over the years but had trouble competing with Google on search and struggled amid the rise of mobile advertising leaders like Facebook.
“This is about as good as it’s going to get,” said Charles King, president of IT analysis firm Pund-IT.
Some investors had pressured the company to extract the value of its highly successful investment in Alibaba, which now has a market capitalization of about $355 billion. So Yahoo came up with a plan to spin off its small-business division with the Alibaba shares to create a tax-free entity, but some investors worried that the spin-off could still be taxed.
So Yahoo suspended that plan and focused on other options, including a potential sale. Starboard Value, a hedge fund that had sought management changes, gained seats on Yahoo’s board as part of a settlement, making a sale virtually certain. In July, Yahoo announced the plan to sell its Internet properties to Verizon for $4.83 billion.
But months later, Yahoo disclosed that it had experienced two major data breaches — among the largest in the nation’s history. Verizon was not aware of the breaches when the original deal was discussed. In February, Verizon said Yahoo reduced the price by $350 million.
On Thursday, Shareholders also approved executive compensation associated with closing the deal. Yahoo CEO Marissa Mayer will make an estimated $23 million through a golden parachute, according to documents filed with the Securities and Exchange Commission. It is unclear whether Mayer will join Verizon, but many analysts do not expect her to do so.
King expects that the layoffs will affect areas of Yahoo’s business that duplicate those of AOL, including Yahoo’s sales and marketing teams.
Not all shareholders favored the sale to Verizon. One Yahoo tech employee, who declined to be named, attended the meeting to vote against the sale.
“I think (Yahoo is) capable of making it on their own,” he said.