It’s official: Yahoo is no longer an independent company.
As of today, Verizon ($VZ) is now the (proud?) owner of the once-popular website and most of its assets, after paying $4.5 billion to acquire Yahoo. By the end of the week, the troubled web company will stop trading on the stock exchange. Yahoo will complete its journey from one of the biggest internet companies on the planet to just another media brand.
How did the company get to this point? You could say it was a series of choke jobs, failures to keep up with the times, and numerous other missteps taken over more than a decade. One could also simply point to the aging of the company’s demographic and introduction of better services that rendered Yahoo redundant. Nonetheless, the company is no longer a company. It is a Verizon subsidiary.
For the time being, Yahoo is still a publicly traded stock with shareholders. They also have hundreds of millions of existing users. What do today’s events mean for them?
Yahoo and AOL are combining into a company called OATH.
Verizon bought Yahoo for the sole purpose of combining it with AOL, another aging internet relic. Each site’s channels will likely be combined into one. For instance, Yahoo and AOL both have finance sections, with Yahoo Finance being the most popular. Chances are AOL’s finance section could go the way of the dodo, or AOL’s finance staff could be pared down and combined with that of Yahoo. After all, with a 15% reduction in total staff between both companies, every department will likely face cuts.
Verizon has yet to say what OATH will mean for Yahoo and AOL users, though they could keep both companies’ logins separate. They could also create a new, unified login for OATH sites. Regardless, if you use either company for email, your account isn’t going anywhere. Verizon needs existing users to stay on the platform to justify their acquisitions.
Yahoo’s stock no longer exists as of this Friday.
$YHOO went public on April 19, 1996. On June 16, 2017, the stock will no longer exist. The Yahoo assets will go to Verizon, and the company’s remaining assets — mainly Yahoo Japan and their stake in Alibaba — will become a separate publicly traded entity. This entity, called Altaba, will start trading on Monday of next week.
What does this mean for shareholders?
We’re not exactly sure. We spent hours combing through investor relations documents, analysts reports, and more. From what we gathered, Yahoo will buy back around $3 billion in shares from existing shareholders at a fixed price (under $50.79). The rest of the existing shares will (probably) be converted into Altaba stock on Monday. Time will tell what happens, but existing Yahoo shareholder will either get money or shares in exchange for their loyalty.
What about CEO Marissa Mayer?
Despite losing billions in value over the last decade-plus, Mayer did some good with Yahoo. She bought Tumblr, a major blogging/social networking site. She modernized the company’s dated online channels. Yet despite her best efforts, she couldn’t make the site into a sustainable business, as the company lost 50% of their employees and the bulk of their ad revenue since she started.
Mayer will receive $23 million in compensation when she departs Yahoo today. This bonus is for Mayer’s time at the company and her efforts to negotiate the now-completed acquisition. This means she made a total of $239 million in stock, stock options, and cash during her tenure at the company.
Should you invest in Altaba?
Altaba is a holding company that owns a minority ownership in Yahoo Japan (still a popular site) and Alibaba. If you want to invest in Alibaba, you might be better off investing directly in the company ($BABA). If you want to invest in Yahoo Japan, you can also invest in SoftBank ($9984), its other owner. Altaba could acquire more companies and become more than just a holding company in the future, though no one really knows the company’s future plans. If you’re dead-set on investing in Altaba, you might want to wait to see their announcements on Monday.