Yahoo buying $3 billion worth of own shares before sale

Yahoo will buy $3 billion of its own shares ahead of its sale to Verizon, a proposal that will expire on June 13, the internet giant disclosed Tuesday in a filing.

Shares of Yahoo jumped 2.2 percent on Tuesday and closed at $50.97. So far in 2017, Yahoo shares have soared 31.8 percent.

“The purpose of the tender offer is to provide liquidity to a potentially significant number of stockholders that will be forced to sell their shares at or prior to the closing of the pending sale of Yahoo’s operating business to Verizon Communications,” the company stated in the regulatory filing with the Securities and Exchange Commission.

The liquidity is required because of what Yahoo’s status will be after it is bought by Verizon.

“Upon completion of the sale transaction, the company will be required to register as a closed-end investment company,” the online company said.

The Sunnyvale-based tech firm estimated, by way of example, that it could potentially buy back the shares at prices somewhere in a range from $44.74 on the low end and $50.79 at the high end. However, the final actual price will not be known until June 9, or two trading days before the tender offer is closed. The actual price is expected to be based on a formula that’s derived, in part, from the Alibaba trading price.

“The tender offer also enables the company to potentially return a significant amount of cash to its stockholders by repurchasing shares,” Yahoo said.

The tech titan’s stock is being offered through a Dutch auction tender offer.

“When the tender offer expires, the company will determine a single purchase price, which will not be less than $37.00 per share, that it will pay for the shares,” Yahoo said in the filing.

In June 2016, Verizon said it intended to buy Yahoo for $4.83 billion. But after disclosures of cyber attacks that resulted in security breaches at Yahoo, the two companies agreed in February to lower the purchase price to $4.48 billion, a $350 million reduction.

Verizon expects to complete its purchase of Yahoo’s core internet assets by the end of June.

The ultimate price for the share buyback is based in part on the price of Alibaba Group Holding, a China-based e-commerce company. Yahoo owns 15 percent of Alibaba.

“The company believes that the tender offer provides a mechanism for completing a sizable repurchase of its shares more rapidly than would be possible through open market purchases,” the SEC filing stated.

 

Photo: A sign outside Yahoo headquarters in Sunnyvale. (LiPo Ching/Bay Area News Group)

 

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  • MAGA420

    Verizon is foolish to saddle themselves with Yahoo’s liability. Yahoo hasn’t innovated in a decade, its products are stale and so is its brand. Why would Verizon want to buy a company responsible for the world’s largest security breeches? Yahoo has long lost its reputation for tech, which was replaced with a reputation for obnoxious d-bag social justice that doesn’t add a cent to their bottom line.

    • sd

      Yet Verizon is only discounting the deal half a billion dollars before it closes. They see *something* others don’t and I don’t think it has anything to do with a whizzy Silicon Valley pedigree or spiffy apps. They’re buying eyeballs, which have been incredibly slow to leave Yahoo despite the data breaches. Don’t forget, Verizon also purchased AOL, whose tech pedigree certainly is no better than Yahoo’s at this time. They’re getting what they want out of both deals.

 
 
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