Why did Verizon reduce the purchase price for Yahoo's operating business?

Verizon reduced the purchase price by $350 million due to user security and data breaches incurred by Yahoo. This adjustment reflects the increased risk and potential liabilities associated with these security incidents.

How will Yahoo's data breaches affect the closing of the acquisition?

The amendment states that, subject to certain exceptions, the security and data breaches and their associated losses will be disregarded for the purposes of specified closing conditions and for determining if a "Business Material Adverse Effect" has occurred. This means Verizon's obligation to close is less likely to be impacted by these specific Yahoo breaches.

Who is responsible for liabilities arising from Yahoo's data breaches after the acquisition closes?

Yahoo, which intends to change its name to Altaba Inc., will retain 50% of certain post-closing liabilities related to governmental or third-party investigations, litigations, or claims stemming from the data breaches. Yahoo will continue to bear 100% of liabilities arising from shareholder lawsuits and SEC investigations.

When is the acquisition expected to be completed?

The transaction is expected to close in the second quarter of 2017, contingent upon the satisfaction of customary closing conditions, including the approval of Yahoo's stockholders.

VZ 8-K: Regulation FD — Feb 21, 2017

Summary

This 8-K filing from Verizon Communications Inc. (VZ) on February 21, 2017, primarily announces an amendment to the stock purchase agreement with Yahoo! Inc. (Yahoo) for the acquisition of Yahoo's operating business. The most significant change for investors is the reduction of the purchase price by $350 million, bringing the total cash consideration to approximately $4.48 billion, subject to certain adjustments. This price reduction is a direct response to identified user security and data breaches at Yahoo, impacting the valuation and perceived risk of the acquisition. Furthermore, the amendment addresses how these security breaches will be handled concerning the closing conditions and the definition of a "Business Material Adverse Effect" under the agreement. While Verizon will acquire Yahoo's operating business, Yahoo (which intends to rename itself Altaba Inc.) will retain 50% of certain post-closing liabilities related to governmental or third-party investigations and claims stemming from these breaches. Yahoo will continue to bear 100% of liabilities from shareholder lawsuits and SEC actions. The transaction remains subject to customary closing conditions, including Yahoo shareholder approval, and is expected to close in the second quarter of 2017.

Key Highlights

1Verizon and Yahoo amended their stock purchase agreement for Yahoo's operating business, reducing the purchase price by $350 million to approximately $4.48 billion.
2The price reduction is linked to Yahoo's user security and data breaches, which will also be disregarded for certain closing conditions and the determination of a "Business Material Adverse Effect."
3Yahoo (to be renamed Altaba Inc.) will retain 50% of specific post-closing liabilities related to investigations and claims arising from data breaches.
4Verizon will continue to hold Yahoo responsible for 100% of liabilities from shareholder lawsuits and SEC investigations.
5The acquisition is expected to close in the second quarter of 2017, subject to customary closing conditions, including Yahoo shareholder approval.
6The filing includes a joint press release dated February 21, 2017, as an exhibit.
7The 8-K filing is also being used to solicit material under Rule 14a-12 of the Exchange Act.

VERIZON COMMUNICATIONS INC 8-K Report, Regulation FD Disclosure (Feb 21, 2017)

Summary

Key Highlights

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