Item 1.01
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Entry into a Material Definitive Agreement.
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As previously disclosed in Yahoo!
Inc.s (Yahoo or the Company) Current Report on Form
8-K
filed with the U.S. Securities and Exchange Commission (the SEC) on July 25, 2016, Yahoo and Verizon
Communications Inc. (Verizon) entered into a Stock Purchase Agreement (the Original Stock Purchase Agreement) on July 23, 2016, pursuant to which Yahoo has agreed to sell, and Verizon has agreed to purchase (the
Sale), all of the outstanding shares of Yahoo Holdings, Inc., a wholly-owned subsidiary of Yahoo (Yahoo Holdings) (and prior to the Sale to cause Yahoo Holdings to sell to a foreign subsidiary of Verizon all of the equity
interests in a foreign subsidiary of Yahoo Holdings that will hold certain foreign subsidiaries relating to the Operating Business (as defined below) of Yahoo), which, immediately prior to the completion of the Sale, will own the Operating Business.
Also as previously announced, concurrently with the execution of the Original Stock Purchase Agreement, Yahoo and Yahoo Holdings entered into a Reorganization Agreement (the Original Reorganization Agreement), pursuant to which Yahoo
will transfer to Yahoo Holdings prior to the consummation of the Sale all of its assets and liabilities relating to the operating business of Yahoo (the Operating Business), other than specific excluded assets and retained liabilities.
On February 20, 2017, Yahoo and Verizon entered into an Amendment to Stock Purchase Agreement amending the Original Stock Purchase
Agreement (the SPA Amendment and, together with the Original Stock Purchase Agreement, the Amended Stock Purchase Agreement), and, concurrently with the execution of the SPA Amendment, Yahoo and Yahoo Holdings entered into an
Amendment to Reorganization Agreement amending the Original Reorganization Agreement (the RA Amendment and, together with the Original Reorganization Agreement, the Amended Reorganization Agreement). Additionally,
concurrently with the execution of the SPA Amendment and the RA Amendment, Yahoo, Yahoo Holdings and Verizon entered into a Settlement and Release Agreement (the Settlement and Release Agreement and, together with the SPA Amendment and
the RA Amendment, the Amendment Documents, and the transactions contemplated by the Amended Stock Purchase Agreement, the Amended Reorganization Agreement, and the Settlement and Release Agreement, the Revised Transactions).
Pursuant to the terms of the SPA Amendment, among other things, (a) the consideration to be paid by Verizon to Yahoo in connection
with the Sale is reduced by $350,000,000 to $4,475,800,000 in cash, subject to certain adjustments as provided in the Amended Stock Purchase Agreement; (b) the termination fee to be paid by Yahoo to Verizon in certain circumstances is reduced
to $134,274,000; (c) the date after which each of Yahoo and Verizon may terminate the Amended Stock Purchase Agreement if the Closing (as defined in the Amended Stock Purchase Agreement) has not occurred has been extended to July 24, 2017; and
(d) certain data security incidents to which Yahoo has been subject will be disregarded, subject to certain exceptions, for purposes of determining whether the conditions to Closing relating to breaches by the Company of its representations,
warranties, and covenants in the Amended Stock Purchase Agreement have been satisfied and whether a Business Material Adverse Effect under the Amended Stock Purchase Agreement has occurred.
Pursuant to the terms of the RA Amendment, among other things, (a) upon and after the Closing, the Company will retain certain
post-closing cash liabilities arising out of governmental or third party investigations, litigations or other claims related to certain data security incidents and other data breaches incurred by the Company that were to be assumed by Yahoo Holdings
under the Original Reorganization Agreement; (b) Verizon will indemnify the Company for 50 percent (with the Company being responsible for the remaining 50 percent) of any such liabilities that have not been finally determined and entered
or stipulated against the Company prior to the Closing; and (c) the Company will be responsible for 100 percent of any such liabilities that are finally determined and entered or stipulated against the Company or its subsidiaries prior to
the Closing.
Pursuant to the terms of the Settlement and Release Agreement, among other things, Verizon released certain claims, subject
to certain exceptions, it (and its affiliates and representatives) may have against the Company (or its affiliates and representatives) relating to certain data security incidents and other data breaches incurred by the Company.
Additional Information
Other than as
expressly modified pursuant to the Amendment Documents, the Original Stock Purchase Agreement and the Original Reorganization Agreement, which were previously filed as Exhibit 2.1 and Exhibit 2.2, respectively, to Yahoos Current Report on Form
8-K
filed with the SEC on July 25, 2016, remain in full force and effect.
The Amendment Documents are attached as Exhibits to this Current Report on Form
8-K
to provide stockholders with information regarding their terms. They are not intended to provide any other factual information about Yahoo. The Amendment Documents contain representations and warranties by
each of the parties to the applicable Amendment Documents. These representations and warranties were made solely for the benefit of the other parties to each such Amendment Document and (i) are not intended to be treated as categorical
statements of fact, but rather as a way of allocating risk to one of the parties if those statements prove to be inaccurate, (ii) may have been qualified in the Amendment Documents by confidential disclosure schedules that were delivered to the
other parties thereto in connection with the signing of the Amendment Documents, which disclosure schedules contain information that modifies, qualifies, and creates exceptions to the representations, warranties, and covenants set forth in the
Amendment Documents, (iii) may be subject to standards of materiality applicable to the parties that differ from what might be viewed as material to stockholders, and (iv) were made only as of the date of the applicable agreement or such
other date or dates as may be specified in such Amendment Document. Moreover, information concerning the subject matter of the representations, warranties, and covenants may change after the date of the Amendment Documents, which subsequent
information may or may not be fully reflected in public disclosures by Yahoo or Verizon. Accordingly, you should not rely on the representations, warranties, and covenants or any descriptions thereof as characterizations of the actual state of facts
or condition of Yahoo or Verizon.
The foregoing summaries of the SPA Amendment, the RA Amendment, and the Settlement and Release
Agreement do not purport to be complete and are subject to, and qualified in their entirety by, the full text of the SPA Amendment, the RA Amendment, and the Settlement and Release Agreement, respectively, copies of which are attached to this
Current Report on Form
8-K
as Exhibit 2.1, Exhibit 2.2, and Exhibit 10.1, respectively, and are incorporated herein by reference.
On February 21, 2017, Yahoo and Verizon issued a joint press release
announcing the execution of the Amendment Documents. The press release is attached as Exhibit 99.1 to this Current Report on Form
8-K
and is incorporated herein by reference.
Item 9.01
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Financial Statements and Exhibits.
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(d) Exhibits.
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Exhibit
Number
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Description
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2.1
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Amendment to Stock Purchase Agreement, dated February 20, 2017, by and between Yahoo! Inc. and Verizon Communications Inc.
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2.2
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Amendment to Reorganization Agreement, dated February 20, 2017, by and between Yahoo! Inc. and Yahoo Holdings, Inc.
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10.1
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Settlement and Release Agreement, dated February 20, 2017, by and among Yahoo! Inc., Yahoo Holdings, Inc., and Verizon Communications Inc.
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99.1
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Joint Press Release of Yahoo! Inc. and Verizon Communications Inc., issued on February 21, 2017
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Forward-Looking Statements.
This communication contains forward-looking statements concerning the proposed sale of the Operating Business. Risks and uncertainties may cause actual results
to differ materially from the results predicted. Potential risks and uncertainties include, among others: (i) the inability to consummate the Revised Transactions in a timely manner or at all, due to the inability to obtain or delays in
obtaining approval of Yahoos stockholders, the necessary regulatory approvals, or satisfaction of other conditions to the closing of the Revised Transactions; (ii) the existence or occurrence of any event, change, or other circumstance
that could give rise to the termination of the Amended Stock Purchase Agreement, which, in addition to other adverse consequences, could result in the Company incurring substantial fees, including, in certain circumstances, the payment of a
termination fee to Verizon under the Amended Stock Purchase Agreement; (iii) potential adverse effects on Yahoos relationships with its existing and potential advertisers, suppliers, customers, vendors, distributors, landlords, licensors,
licensees, joint venture partners and other business partners; (iv) the implementation of the Revised Transactions will require significant time, attention and resources of Yahoos senior management and others within Yahoo, potentially
diverting their attention from the
conduct of Yahoos business; (v) risks related to Yahoos ability to retain or recruit key talent; (vi) costs, fees, expenses and charges related to or triggered by the
Revised Transactions; (vii) the net proceeds that the Company will receive from Verizon is subject to uncertainties as a result of the purchase price adjustments in the Amended Stock Purchase Agreement; (viii) restrictions on the conduct
of Yahoos business, including the ability to make certain acquisitions and divestitures, enter into certain contracts, and incur certain indebtedness and expenditures until the earlier of the completion of the Revised Transactions or the
termination of the Amended Stock Purchase Agreement; (ix) potential adverse effects on Yahoos business, properties, or operations caused by Yahoo implementing the Revised Transactions or foregoing opportunities that Yahoo might otherwise
pursue absent the pending Revised Transactions; (x) the initiation or outcome of any legal proceedings or regulatory proceedings that may be instituted against Yahoo and its directors and/or officers relating to the Revised Transactions; and
(xi) following the Closing, the Company will be required to register and be regulated as an investment company under the Investment Company Act of 1940, which will result in, among other things, the Company having to comply with the regulations
thereunder, certain stockholders potentially being prohibited from holding or acquiring shares of the Company, and the Company likely being removed from the Standard and Poors 500 Index and other indices which could have an adverse impact on
the Companys share price following the Revised Transactions.
All of these risks and uncertainties could potentially have an adverse impact on
Yahoos business and financial performance, and could cause its stock price to decline.
More information about other potential factors that could
affect Yahoos business and financial results is included under the captions Risk Factors and Managements Discussion and Analysis of Financial Condition and Results of Operations in Yahoos Annual Report on
Form
10-K
for the year ended December 31, 2015, as amended, and Quarterly Report on Form
10-Q
for the quarter ended September 30, 2016, which are on file with
the SEC and available on the SECs website at
www.sec.gov
. All information set forth in this communication is as of February 21, 2017. Yahoo does not intend, and undertakes no duty, to update this information to reflect subsequent
events or circumstances.
Important Additional Information and Where to Find It.
On September 9, 2016, Yahoo filed with the SEC a preliminary proxy statement regarding the proposed sale of Yahoos operating business to Verizon.
Yahoo will file with the SEC a definitive version of the proxy statement, which will be sent or provided to Yahoo stockholders when available. The information contained in the preliminary proxy statement is not complete and may be changed.
BEFORE
MAKING
ANY
VOTING
DECISION,
YAHOOS
STOCKHOLDERS
ARE
STRONGLY
ADVISED
TO
READ
YAHOOS
PRELIMINARY
PROXY
STATEMENT
IN
ITS
ENTIRETY
(INCLUDING
ANY
AMENDMENTS
OR
SUPPLEMENTS
THERETO)
AND,
WHEN
IT
BECOMES
AVAILABLE,
YAHOOS
DEFINITIVE
PROXY
STATEMENT
IN
ITS
ENTIRETY
(INCLUDING
ANY
AMENDMENTS
OR
SUPPLEMENTS
THERETO)
AND
ANY
OTHER
DOCUMENTS
FILED
WITH
THE
SEC
IN
CONNECTION
WITH
THE
REVISED
TRANSACTIONS
OR
INCORPORATED
BY
REFERENCE
THEREIN
BECAUSE
THEY
WILL
CONTAIN
IMPORTANT
INFORMATION
ABOUT
THE
REVISED
TRANSACTIONS.
Investors and stockholders may obtain a free copy of Yahoos preliminary proxy statement and any amendments or supplements to the preliminary proxy statement, Yahoos
definitive proxy statement (when available) and any amendments or supplements to the definitive proxy statement (when available), and other documents filed by Yahoo with the SEC (when available) in connection with the Revised Transactions for no
charge at the SECs website at
www.sec.gov
, on the Investor Relations page of Yahoos website
investor.yahoo.net
, or by writing to Investor Relations, Yahoo! Inc., 701 First Avenue, Sunnyvale, CA 94089.
Yahoo and its directors and executive officers, as well as Verizon and its directors and executive officers, may be deemed participants in the solicitation of
proxies from Yahoos investors and stockholders in connection with the Revised Transactions. Information concerning the ownership of Yahoo securities by Yahoos directors and executive officers is included in their SEC filings on
Forms 3, 4 and 5, and additional information is also available in Yahoos annual report on Form
10-K
for the year ended December 31, 2015, as amended, and Yahoos proxy statement for its
2016 annual meeting of stockholders filed with the SEC on May 23, 2016. Information about Verizons directors and executive officers is set forth in Verizons annual report on Form
10-K
for the
year ended December 31, 2015 and Verizons proxy statement for its 2016 annual meeting of stockholders filed with the SEC on March 21, 2016. Information regarding Yahoos directors, executive officers, and other persons who may,
under the rules of the SEC, be considered participants in the solicitation of proxies in connection with the Revised Transactions, including their respective interests by security holdings or otherwise, also is set forth in the preliminary proxy
statement described above and will be set forth in the definitive proxy statement relating to the Revised Transactions when it is filed with the SEC. These documents may be obtained free of charge from the sources indicated above.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
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YAHOO! INC.
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By:
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/s/ Kenneth A. Goldman
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Kenneth A. Goldman
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Chief Financial Officer
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Date: February 21, 2017
EXHIBIT INDEX
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Exhibit
Number
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Description
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2.1
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Amendment to Stock Purchase Agreement, dated February 20, 2017, by and between Yahoo! Inc. and Verizon Communications Inc.
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2.2
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Amendment to Reorganization Agreement, dated February 20, 2017, by and between Yahoo! Inc. and Yahoo Holdings, Inc.
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10.1
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Settlement and Release Agreement, dated February 20, 2017, by and among Yahoo! Inc., Yahoo Holdings, Inc., and Verizon Communications Inc.
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99.1
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Joint Press Release of Yahoo! Inc. and Verizon Communications Inc., issued on February 21, 2017
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