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Forward-Looking Statements
This presentation contains forward-looking statements concerning the agreement entered into by Yahoo! with Alibaba Group Holding Limited, including, without limitation, statements about the expected timing of closing of the transactions contemplated by the agreement, the ability of Yahoo! to monetize its holdings in Alibaba in both the near-term and in the future, potential future actions by Yahoo! and Alibaba concerning future business initiatives between Yahoo! and Alibaba and the potential for an initial public offering of Alibaba shares, and other expected benefits of the agreement and related agreements. Risks and uncertainties may cause the actual results and benefits of the transactions contemplated by the agreement and related agreements to differ materially from management expectations. The potential risks and uncertainties include, among others, the failure to consummate or delays in consummating the transactions contemplated by the agreement; uncertainty regarding the future valuation of Alibaba; uncertainty regarding the financing of the transactions; uncertainty regarding if and when there will be an initial public offering of Alibaba shares; uncertainty regarding any future business initiatives with Alibaba; general economic and market conditions; and the possibility that some or all of the expected benefits of the agreement and related agreements may not be realized. All information set forth in this presentation is as of May 20, 2012. Yahoo! does not intend, and undertakes no duty, to update this information to reflect subsequent events or circumstances. More information about potential factors that could affect Yahoo!s business and financial results is included under the captions Risk Factors and Managements Discussion and Analysis of Financial Condition and Results of Operations in Yahoo!s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, as amended, and Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, which are on file with the Securities and Exchange Commission (SEC) and available at the SECs website at www.sec.gov. Yahoo! and the Yahoo! logos are trademarks and/or registered trademarks of Yahoo! Inc. All other names are trademarks and/or registered trademarks of their respective owners.
Agreement to sell 25% of Yahoo!s current stake at the IPO price at the time of IPO (~10% of Alibaba)
Yahoo! also benefits from these incentives through its remaining stake in Alibaba Group:
Yahoo!s pro forma ownership accretes from 20% to ~23%3 Alibaba Group benefits from the incentive discount in which Yahoo! participates pro rata through its ownership interest More attractive valuation benchmark
1 2 3 Assumes 523 million shares sold in the Initial Repurchase (20%) Yahoo! share includes both incremental purchase price and pro rata value of incentive discount through remaining stake Based on Alibaba Groups management guidance regarding sources of financing 6
Sale of 25% of Yahoo!s Alibaba Group stake in a Qualified IPO Price will be the IPO price net of underwriting fees Yahoo! will have input and influence on the selection of underwriters No specific commitment to IPO timing, but Yahoo!s obligation to retain shares to sell at IPO expires in December 2015
Post IPO Right to sell retained shares post-IPO with Alibaba Group marketing support No obligation to sell the remaining stake at a certain time
Dividends
Illustrative Cash Proceeds from Initial Repurchase (Assumes 20% Stake Sale at Floor Valuation)
$ in billions Gross consideration for stake Plus: TIPLA payment Less: Estimated taxes (1) Less: Alibaba preferred note Net after-tax cash proceeds to Yahoo! (2)
1. 2. 38% tax rate and expected basis of approximately $850 million on stake sold Does not add due to rounding 10