Yahoo has disclosed in a filing with federal regulators that following the sale of its operating business to Verizon, the company will restructure its board and change its name.
It also warned that a massive hack disclosed last year could imperil its US$4.8 billion sale to Verizon.
Yahoo will operate as an investment company after the Verizon deal closes, it reported in the document filed Monday with the Securities and Exchange Commission. It will reduce its board to five members, with David Filo, Eddy Hartenstein, Richard Hill, Marissa Meyer, Jayne Shaw and Maynard Webb departing from the board.
The planned board departures are not due to any disagreements with the company or anything related to its operations, policies or practices, according to the filing.
The remaining board members, Tor Braham, Eric Brandt, Catherine Friedman, Thomas McInerney and Jeffrey Smith, will stay on as directors after the deal closes.
To facilitate Yahoo’s transformation into an investment company, Brandt will become chairman of the board and Webb will become chairman emeritus.
Yahoo also announced a new name for the company: “Altaba Inc.”
“The latest twist in the Yahoo tale reveals just how quickly Yahoo has fallen from the upper firmament of tech’s stars,” Midia Research Senior Analyst Tim Mulligan told the E-Commerce Times.
Verizon may “assert, or threaten to assert” rights or claims with respect to the stock purchase agreement in connection with two separate hacking incidents Yahoo disclosed last year, according to the filing. Those rights include terminating or renegotiating the terms of the deal.
Yahoo last month disclosed that it was the victim of a massive hack by a suspected state-sponsored entity, resulting in the >breach of more than 1 billion accounts. That incident was separate from an attack disclosed in September.
The hack that it disclosed last month resulted in the loss of names, email addresses, telephone numbers, dates of birth, hashed passwords. and in some cases encrypted or unencrypted security questions, Yahoo said.
While it remains unclear how many users decided to dump Yahoo permanently after the breach disclosures, it is clear that Verizon’s interest in the Yahoo business was due at least in part to its large volume of legacy users, observed telecom analyst Jeff Kagan.
“Verizon wants Yahoo customers so they can have a bigger customer base to sell to. With that in mind, I see Verizon continuing with the deal, just with different numbers,” he told the E-Commerce Times.
Verizon is concerned about the impact of the hack on the Yahoo business, according to Marni Walden, president of the product innovation and new business unit.
Verizon was looking to create scale in terms of adding Yahoo’s core audience to the core AOL audience — going from hundreds of millions of users to billions of users, she said last week at the Citi Internet, Media and Telecommunication conference in Las Vegas.
“However, we obviously had the first breach and we were headed down the path to understand that to make sure we weren’t jumping off blindly off a cliff,” she said.
“We have that responsibility, Walden said.
“Unfortunately I can’t sit here today and say with confidence one way or the other because we still don’t know,” she said, referring to the outcome.
There are “still things that have to be completed in the investigation,” Walden noted.
Verizon has the right to change the value or the terms of the transaction after learning about important problems, remarked Peter Vogel, a partner at the Gardere law firm.
It also could threaten litigation during the due diligence process.
That’s true for any purchaser in a merger and acquisition, Vogel told the E-Commerce Times, noting that these circumstances are quite common in M&A deals.