Yahoo! is dead (sort of), long live Altaba (perhaps)

SUMMARY:

Yahoo!’s board of directors is putting in places the pieces for life after a Verizon takeover, but it could be premature thinking if the deal doesn’t proceed as planned.

Marissa Mayer
Marissa Mayer

While Verizon still doesn’t seem entirely sure whether the deal’s on or not, Yahoo!’s board of directors is readying itself for lift after the acquisition of the bulk of the firm – and that includes the departure of Marissa Mayer as CEO.

In a filing with the Securities and Exchange Commission yesterday, Yahoo! confirms that, assuming the $4.8 billion takeover by Verizon completes, then Mayer, along with Yahoo! co-founder David Filo, will depart. Yahoo! itself will take its remaining assets – the firm’s stake in Chinese e-commerce firm Alibaba – and rebrand as Altaba. Altaba will be a holding company for the Alibaba shares and Yahoo Japan, together worth around $40 billion.

In the SEC filing, Yahoo said:

In light of the fact that following the Closing the Company will operate as an investment company under the Investment Company Act of 1940, the Board has determined that, immediately following the Closing, the size of the Board will be reduced to five (5) directors.

Each of David Filo, Eddy Hartenstein, Richard Hill, Marissa Mayer, Jane Shaw and Maynard Webb has indicated that he or she intends to resign from the Board effective upon the Closing, and that his or her intention to resign is not due to any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.”

Mayer had been coy about her plans about what she would do in the event of the Verizon deal closing and that remains the case. Verizon hasn’t said whether it would or would not ask her to stay on board in some capacity, although the betting is that she’ll walk off with a circa $55 million severance payment. 

For her part, Mayer said last year in a blog post that she planned to stick around: 

For me personally, I’m planning to stay. I love Yahoo, and I believe in all of you. It’s important to me to see Yahoo into its next chapter.

Yahoo!’s board was keen to insist that the decision to proceed without her was not down to problems with her performance. It was known that Mayer wanted to carry on with her turnaround plan for the firm rather than go to market, but pressure from activist shareholders put paid to that.

But in its filing, Yahoo! states of all those who would be stepping down:

His or her intention to resign is not due to any disagreement with the company on any matter relating to the company’s operations, policies or practice.

But does it matter?

All of this is, of course, dependent on the deal actually closing. The exposure of two major hacking incidents that occured prior to the offer from Verizon being accepted has cast doubt on whether it will (a) go ahead or (b) go ahead in a significantly modified manner ie with a lower offer price than is currently on the table.

AOL Chief Tim Armstrong told CNBC late last week that the timescale that Verizon is working to is to make a decision in “the first half of the year”. Significantly he put that deadline down to waiting for Yahoo! to complete its own investigations in the scale of hacking attacks: 

The hacking news that came out of Yahoo … is something that Verizon and the general counsel of Verizon is dealing directly with Yahoo on. I remain hopeful the deal will close and I think we’ll see what the outcomes are of the Yahoo investigations in the meantime.

But Marni Walden, Verizon president of product innovation and new businesses at Verizon, struck a more cautious note when she said:

I can’t sit here today and say with confidence one way or another because we still don’t know…There’s a lot of work that has to happen…We have to be responsible to the business and to everyone that invests in Verizon.

Walden did indicate however that she expected decisions to be made soon:

We think it will take weeks at least. We don’t have a desire to have it drag on forever, that’s not our intent.

My take

I still think it’s more likely than not that Verizon will end up taking on the Yahoo! assets, but the Yahoo! board is going to find itself being dealt a tougher hand than it had expected. The exposure of the data breaches and the speed with which the subsequent investigation has proceeded seems unlikely to have impressed Verizon bosses. I can’t see any of this particularly helping any ambition that Mayer might have to move across to the new company, even assuming that there’s a desire on the part of the Verizon management to accommodate her. The idea that we could still be hanging on waiting to find out what happens for months yet is depressing.

Image credit - World Economic Forum