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USD 3 BN DEAL - Yahoo Announces Commencement of Tender Offer to Purchase up to $3.0 Billion of Its Common Stock

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Yahoo Announces Commencement of Tender Offer to Purchase up to $3.0 Billion of Its Common Stock

Business Wire

SUNNYVALE, Calif. -- May 16, 2017

Yahoo! Inc. (“Yahoo” or the “Company”) (NASDAQ: YHOO) announced today the commencement of a modified “Dutch auction” self-tender offer to purchase for cash up to $3,000,000,000 of shares of its common stock at prices equal to (A) the “Alibaba VWAP” (as described below), multiplied by (B) multiples specified by tendering stockholders not greater than 0.420 nor less than 0.370, provided that in no event will the purchase price be less than $37.00 per share, less applicable withholding taxes and without interest. The terms and conditions of the tender offer are set forth in an Offer to Purchase, Letter of Transmittal and related documentation that are being distributed to holders of the Company’s shares and are being filed with the U.S. Securities and Exchange Commission (the “SEC”).

The tender offer will expire on June 13, 2017 at 11:59 p.m., New York City time, unless the tender offer is extended or withdrawn by the Company. Tenders of shares must be made prior to the expiration of the tender offer and may be withdrawn at any time prior to the expiration of the tender offer, in each case in accordance with the procedures described in the tender offer materials that are being distributed to stockholders.

The “Alibaba VWAP” (determined as described in the Offer to Purchase) means the daily volume-weighted average price for an American Depositary Share (“ADS”) of Alibaba Group Holding Limited (“Alibaba”), on the New York Stock Exchange, on the second trading day prior to the expiration date; provided, that in no event shall the Alibaba VWAP be less than $100.00 for the purpose of computing the purchase price. Yahoo will announce the Alibaba VWAP and the prices payable for shares pursuant to the tender offer for each multiple within the Company’s specified range by press release no later than 4:30 p.m., New York City time, on the second trading day prior to the expiration date (June 9, 2017 based on the current expiration date). Such press release, which will also include the maximum number of shares we may purchase in the tender offer, will also be filed as an amendment to the Schedule TO that we are filing with the SEC relating to the tender offer.

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 Inc. (the “Sale Transaction”) as a result of the fact that, upon completion of the Sale Transaction, the Company will be required to register as a closed-end investment company under the Investment Company of 1940 and its shares are expected to be removed from the Standard and Poor’s 500 Composite Index (the “S&P 500”) and other indices. The tender offer also enables the Company to potentially return a significant amount of cash to its stockholders by repurchasing shares. 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.

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 by determining the lowest multiple within the Company’s specified range at which shares have been tendered or have been deemed to be tendered that, when multiplied by the Alibaba VWAP, which will not be less than $100 for such purpose, will enable the Company to purchase the maximum number of shares properly tendered in the tender offer and not properly withdrawn having an aggregate purchase price not exceeding $3,000,000,000.

The NASDAQ closing price of Yahoo’s common stock on May 15, 2017 was $49.86 per share. Based on an indicative Alibaba VWAP of $120.9247 as of May 15, 2017, the highest price payable in the tender offer (determined by multiplying such indicative Alibaba VWAP by the high end of the Company’s specified range of 0.420) would be $50.79 per share, which represents a premium of approximately 1.9% to the last reported closing price of the shares on such date, and the lowest price payable in the tender offer (determined by multiplying such indicative Alibaba VWAP by the low end of the Company’s specified range of 0.370) would be $44.74 per share, which represents a discount of approximately 10.3% to the last reported closing price of the shares on such date.

Throughout the tender offer, a dedicated webpage will be available atwww.innisfreema.com/tender/yhoo, which will provide, among other information, (i) for each trading day prior to the Company’s announcement of the Alibaba VWAP, indicative prices payable for the shares pursuant to the tender offer for each multiple that a tendering stockholder can select within the Company’s specified range based on the indicative Alibaba VWAP on the preceding trading day and (ii) after the Company announces the Alibaba VWAP, the actual prices payable for the shares pursuant to the tender offer for each such multiple. Such dedicated webpage will also show reasonably current trading prices of the Company’s shares and Alibaba’s ADSs.

All shares accepted for payment will be purchased at the purchase price determined in the tender offer, regardless of whether any stockholder tendered such shares at a lower multiple than the final multiple used in determining the purchase price. Upon the terms and subject to the conditions of the tender offer, stockholders will receive the purchase price in cash, less any applicable withholding taxes and without interest, for shares properly tendered (and not properly withdrawn) at prices equal to or less than the purchase price. If shares are tendered at prices at or below the purchase price with an aggregate purchase price of more than $3,000,000,000, tendering stockholders whose shares are tendered at or below the purchase price owning fewer than 100 shares, or “odd lot” holders, will have their shares purchased without proration and all other tendered shares at or below the purchase price will be purchased on a pro rata basis, subject to the conditional tender provisions described in the tender offer materials being distributed to stockholders. Stockholders whose shares are purchased in the tender offer will be paid promptly after the expiration of the tender offer. All shares tendered at prices above the purchase price will not be purchased and will be returned promptly after the expiration of the tender offer to the tendering stockholders, free of charge. The Company also reserves the right to purchase up to an additional 2% of its outstanding shares, thereby increasing the aggregate purchase price, pursuant to and without amending or extending the tender offer.

The tender offer is not conditioned upon obtaining financing or any minimum number of shares being tendered; however, the tender offer is subject to a number of other terms and conditions, which are specified in the Offer to Purchase, including the conditions that (i) the Sale Transaction shall have been completed, (ii) the Company’s shares shall have been removed from the S&P 500 and (iii) the Alibaba VWAP shall not be less than $80.00. In the event that the completion of the Sale Transaction is delayed beyond the date on which the shares are removed from the S&P 500, the Company may waive, in its discretion, the condition to the tender offer that the Sale Transaction shall have been completed.

The Company’s directors and executive officers have informed the Company of their intention not to tender any shares in the tender offer.

J.P. Morgan Securities LLC will serve as dealer manager for the tender offer, Innisfree M&A Incorporated will serve as information agent for the tender offer and Computershare Trust Company, N.A. will serve as depositary for the tender offer. For more information about the tender offer, please contact Innisfree M&A Incorporated at (877) 750-9498.

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