What’s left of Yahoo is nothing to sneeze at
In the case of Yahoo, what’s left of the former Silicon Valley giant is likely worth more than what has been sold.
Monday, Verizon said it will pay $4.8 billion in cash to acquire Yahoo’s core business, consisting of Internet properties including its email service as well as the Yahoo brand. The deal will close by the first quarter of 2017. CEO Marissa Mayer will also move on to Verizon.
The rest of Yahoo will morph into a yet-to-be-named publicly traded investment company, with a 15% stake in Alibaba worth $32 billion and a 35.5% stake in Yahoo Japan worth about $8 billion. The new company, referred to as RemainCo in a conference call to investors Monday, also owns convertible notes, Yahoo cash, minority investments and non-core patents, said a joint statement from Verizon and Yahoo.
Those valuable stakes stem from prescient investments made more than a decade ago.
In 2005, Yahoo announced a partnership with Alibaba that included investing $1 billion in the Chinese retailer for a 40% economic interest. Alibaba has since become a retailing giant, spawning the biggest IPO in the U.S. when it started trading on the New York Stock Exchange in 2014. Alibaba boasts a market cap topping $200 billion.
“That should go down as one of the greatest investments of publicly traded companies,” Scott Kessler of S&P Global Market Intelligence says of Yahoo’s Alibaba stake. In 2012, Yahoo sold half its Alibaba stake for $7.1 billion.
The other big part of “RemainCo” is Yahoo Japan. It is among the most popular websites in the country, closely trailing Google, according to rankings released in March by research firm comScore.