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January 25, 2017Yahoo Changing its Name to ‘Altaba’
Yahoo Inc said Monday that it would rename itself Altaba Inc and Chief Executive Officer Marissa Mayer would step down from the board after the closing of its deal with Verizon Communications Inc.
Yahoo has a deal to sell its core internet business, which includes its digital advertising, email and media assets, to Verizon for $4.8 billion. Yahoo announced that, following the close of its merger with Verizon, what’s left of the company will be changing its name to Altaba. Verizon’s acquisition of Yahoo, the latter announced Monday that it will change the name of its stake in Alibaba and other holdings to Altaba, effective as soon as the Verizon deal closes. This was disclosed in an SEC filing. Basically, Verizon is paying $4.8 billion solely for Yahoo’s core internet business, leaving behind Yahoo’s 15% of Chinese retail giant Alibaba and a part of Yahoo Japan, which is a joint venture with Softbank. Those assets will continue to exist in a separate company that will now operate under the catchy Altaba name.
The assets using the name Yahoo – such as email, sports and finance content – will come under the Verizon umbrella once the $4.8 billion sale goes through. That means the remaining parts of the business, which will be publicly traded and are currently known as RemainCo, can no longer use the name Yahoo. These include 15 percent of Chinese e-commerce company Alibaba and 35.5 percent of Yahoo Japan. The name Altaba is pretty similar to Alibaba, and is thought to be a combination of the words “alternative” and “Alibaba.”
What’s the Deal with Altaba ?
It looks like Verizon will be the new owner of Yahoo. The two companies are ready to announce that they have struck a roughly $4.8 billion deal, according to a report in Recode, citing anonymous sources. The announcement could come on Monday, with both companies hoping to make it official before Tuesday when Verizon is scheduled to announce its quarterly financial results, Recode reports.
The terms of the deal are apparently still unclear, including whether it includes Yahoo’s trove of patents, or any of its real estate. And the deal would of course have to get regulatory approval. But the news that the two companies have reached an agreement would mark the end of the auction process that Yahoo began earlier this year and which involved several interested bidders, including private equity firms.
“For Verizon, it is something that they probably expect to see before their deal is approved, so they can maximize their investment in the Yahoo brand” Sotirios Paroutis, associate professor of strategic management at the U.K.’s Warwick Business School. For Altaba, it signals a refocusing on the Asian-based assets, but it can also be seen as a legal and tax-efficient way to deal with the break-up of Yahoo,” he added.
“Anchoring the new name on the valuable link with Alibaba makes sense, as it is a fresh break from Yahoo’s troubled recent past. If true that the first part of the name is about ‘alternative,’ it remains to be seen what is alternative about the new firm and how its strategy will relate to Alibaba.”
AOL CEO Tim Armstrong Reached Yahoo on the Behalf of Verizon
AOL CEO Tim Armstrong will be reaching out to Yahoo on behalf of Verizon for a possible acquisition, Bloomberg’s Scott Moritz reported Monday. The report said Armstrong is reaching out “informally,” and will act on behalf of AOL’s parent company Verizon, whose CEO Lowell McAdam expressed interest in possibly acquiring Yahoo during CNBC Jim Cramer’s “Mad Money” last week. There haven’t been any formal talks at this point between the two companies, but Armstrong is “taking a lead in preliminary discussions,” the report added.
Verizon CEO McAdam strongly hinted that his company’s interested in a Yahoo deal during Friday’s “Mad Money,” saying, “We have to understand the trends. But then at the right price, I think marrying up some of their assets with AOL and the leadership would be good.” Yahoo said during its earnings call last week that it would explore a possible sale of its core internet business, when it said in a statement it would engage in “qualified strategic proposals.”
Marissa Mayer To Step Down From Yahoo
A day or so ago ago, via a SEC filing, we learned two things about Yahoo. First, Marissa Mayer will be stepping down and second, the company will be renamed to Altaba. Marissa left Google, at her pretty high position there, in 2012 to become the CEO of Yahoo after several other CEOs failed. Many had high hopes she would be able to turn the company around, but clearly, it didn’t happen.
Five other Yahoo directors would also resign after the deal closes, Yahoo said in a regulatory filing on Monday. The remaining directors will govern Altaba, a holding company whose primary assets will be a 15 percent stake in Chinese e-commerce company Alibaba Group Holding Ltd and 35.5 percent stake in Yahoo Japan.
Microsoft’s Previous Bid for Yahoo in 2008
As Yahoo! (YHOO) has reportedly given potential buyers two weeks to submit bids for its core business and holdings in Asia, according to the Wall Street Journal, a familiar bidder has re-emerged. On Feb. 1, 2008 , Microsoft offered close to $45 billion for Yahoo. Both companies were getting trounced by Google in search and online ads. Combining the two, so Microsoft thought, would create a credible challenger. As Microsoft reportedly considers supporting a bid for Yahoo!, it’s worth looking at how its failed 2008 effort to buy the company would have worked out.
Yahoo was founded by Stanford students Jerry Yang and David Filo, who launched “Jerry and Dave’s Guide to the World Wide Web” in 1994, which became Yahoo in 1995. Filo is to resign from the Yahoo board, along with CEO Marissa Mayer, according to an SEC 8-K filing on Monday. Mayer will reportedly join Verizon once the deal closes but there has been no official confirmation of this.
Yahoo’s name change represents a sad ending to one of the most familiar names on the internet. Founded by Stanford grad studentsJerry Yang and David Filoin 1994, the web pioneer’s name was an acronym that reflected the industry’s wacky early days :Yet Another Hierarchical Officious Oracle. It’s possible that Verizon may continue to use the Yahoo brand for some of the consumer online services that it will acquire in the deal.
