They will receive about $5.27[1] per share of YHOO stock they hold (or perhaps an equivalent amount of verizon stock if they do the deal that way) in exchange for the portion of the business being sold. Perhaps a bit less than this if there are transaction fees or taxes that must be paid.
They will then continue to hold their Yahoo shares which will represent their holdings in Alibaba and Yahoo Japan as well as Yahoo's patent portfolio.
1. $5B / 948.25M outstanding shares ~= $5.27 per share.
Wait?! is that really how this works? What if people want to keep owning the online part of the business? Are they hooped? Seems like you could really royally screw shareholders like that (i.e. sell all the good parts and leave shareholders holding the bad parts).
Their share price is about 39 USD right now, that means they sold off a huge chunk of the biz for 13% (5.27/39.38 = 0.1338) of the stock's current valuation, right?
Forgive my incredulity, I genuinely didn't know how this kind of thing worked.
Deals like this are made by the board of directors, who represent the shareholders and have a fiduciary duty to them, as well as being shareholders themselves. So that's your guarantee of it not being a crap deal.
If you do a sum-of-the-parts valuation of Yahoo, you can end up seeing that the core business has a negative value. So holders of YHOO will trade something worth -1$bn for $5bn in cash, that's a pretty good deal.
Sum of parts for yahoo is a terrible way to calculate it's actual value. If you look at the balance sheet you'll see billions in deferred taxes. That relates directly towards selling alibaba and yahoo Japan in the open market. The play on yahoo now will be is if yahoo board members can save money on those taxes. If you think they can, you win. If not, stock is trading roughly around the fair price.
When you sell part of a business, the owners of the business (the stockholders) receive their share of the proceeds. Management (the CEO and other senior leaders) is hired by the stockholders to negotiate these sorts of deals (among other things). The stockholders are always free to fire management for poor performance if they don't like what management is doing.
You are correct to note that Yahoo's actual business represents only a small portion of the value of the company at this point. The majority of the value of the company is Yahoo's holdings in Alibaba and Yahoo Japan (a similarly named but completely separate enterprise).
Frankly, I'm a bit surprised that they managed to get $5B for their core business. I think YHOO shareholders are getting a pretty good deal here.
They will then continue to hold their Yahoo shares which will represent their holdings in Alibaba and Yahoo Japan as well as Yahoo's patent portfolio.
1. $5B / 948.25M outstanding shares ~= $5.27 per share.