Yahoo will shed members off its board after Verizon's acquisition of the company pushes through, the Sunnyvale, California, company said on Monday. This whittling down includes Marissa Mayer, Yahoo's CEO, and David Filo, Yahoo's cofounder. Both will step down as board directors.
Members Will Exit Yahoo's Board
After the sale of its core internet business, Yahoo's RemainCo — its stake in Alibaba and other ancillary holdings — will be called Altaba, said Yahoo in a regulatory filing.
The name is a portmanteau of "alternate" and "Alibaba," reports the Wall Street Journal, citing a person familiar with the matter. Eric Brandt will become Altaba's chairman. Previously, he was Broadcom's chief financial officer. Last March, Brandt joined Yahoo's board. Four other directors currently occupying a seat on the board will join him once the sale is closed.
Verizon's Acquisition Of Yahoo
The shake-up is to occur after the Verizon deal, figures of which amount roughly to $4.8 billion. The purchase, however, has been mired by recent reports of data breaches of Yahoo's user data. In the filing, Yahoo said Verizon could opt out of the acquisition or set renegotiations in place because of the hacks.
A second data breach of 1 billion accounts last month invoked another needle scratch to Verizon's confidence over the purchase. Both breaches could warrant Verizon to change terms, executives have said. Those hacks could fuel's Verizon's intent to possibly reduce the acquisition price. By mid-December last year, it was exploring such a reduction, Bloomberg reported.
In spite of Yahoo's noxious dents in terms of security, analyst have opined that the company's value is rooted largely in its Alibaba and Yahoo Japan stakes, instead of the core business, which is what's being handed over to Verizon for the aforementioned sum. About 61 percent of Yahoo's worth is tied to its stake in Alibaba, according to Ken Sena, an Evercore ISI analyst.
If the acquisition pulls through, six Yahoo directors are expected to exit, including Mayer. She, however, will still be part of the company post-acquisition. Mayer became the company's CEO in July 2012, after migrating from Google to Yahoo.
Verizon sought to purchase Yahoo in July, but the deal hasn't closed yet. The detriment of the hacks, however, can possibly be scrapped and the deal might very well proceed. Tim Armstrong, AOL's chief executive, is confident it will, reports CNBC.
It remains to be seen whether the deal closes or not, given the upset over Yahoo's data breaches. That said, the board structure shake-ups are expected to occur if the sale is completed.
Will Yahoo Now Be Called Altaba?
Yes, and no.
As previously mentioned, Altaba is RemainCo's new name, which is the company's Alibaba stake. This stake is part of a group of holdings Yahoo was allowed to create as part of the deal's agreement. These valuable holdings include a 35.5 percent stake in Yahoo Japan, a 15 percent interest in Alibaba, cash, convertible notes, certain minority investments, and Excalibur, its noncore patent portfolio.