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Yahoo Japan sought merger with Yahoo before Verizon's purchase

Saturday, September 10, 2016 - 08:51

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Yahoo Japan Corp proposed a "merger of equals" with Yahoo! Inc - but was rebuffed - during a months-long process that eventually led to Verizon Communications Inc acquiring the US internet company's core assets for more than US$4.8 billion, according to a regulatory filing detailing the sales effort.

[SAN FRANCISCO] Yahoo Japan Corp proposed a "merger of equals" with Yahoo! Inc - but was rebuffed - during a months-long process that eventually led to Verizon Communications Inc acquiring the US internet company's core assets for more than US$4.8 billion, according to a regulatory filing detailing the sales effort.

The board of Yahoo Japan in February sent a letter to Yahoo chairman Maynard Webb and chief executive officer Marissa Mayer about a deal that would hand the company's shareholders 50 per cent of the combined entity - and about US$14 billion in cash, according to the filing made Friday.

It also contemplated a commitment from Alibaba Group Holding Ltd to purchase about half of Yahoo's stake in the company. The deal was rejected for reasons including: It offered no premium and would mean a full tax hit for the Chinese shares of Alibaba.

"After careful consideration, the Strategic Review Committee concluded that the terms described in Yahoo Japan's letter were not compelling," the company said in the filing.

The filing sets out a long and complex process that led to a winning bid in July as several entities offered up billions for the struggling web portal's core business.

Along the way, the company communicated with more than 50 potential parties. More than 30 parties signed confidentiality agreements to review financial data on Yahoo, according to the filing.

Verizon announced July 25 that it would acquire Yahoo's internet assets for more than US$4.8 billion, bringing the web portal together with longtime rival AOL.

The telecommunications company will add Yahoo web services that still draw 1 billion monthly users, including mail, news and sports content and financial tools.

The all-cash deal, which is expected to close in early 2017, includes Yahoo real estate, but excludes some intellectual property which will be sold separately. Yahoo will be left with its stakes in Alibaba and Yahoo Japan.

The filing also revealed that Yahoo co-founder David Filo, a board member, was asked to back one of the proposals in July. That proposal wasn't accepted.

Mr Filo, however, expressed interest in possibly joining the bid, and was restricted in the decision-making process, according to the filing.

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