Yahoo 2007 Annual Report Download - page 77

Company’s continued ownership in Yahoo! 7. This non-cash gain was accounted for as a capital transaction and
recorded as additional paid-in capital because of certain future events that could affect actual realization of the gain.
The Company also recorded a minority interest of $7 million related to its reduced ownership of Yahoo! Australia
and Seven’s retained interest in their contributed net assets.
Investment in Gmarket Inc. During the year ended December 31, 2006, the Company acquired shares in Gmarket
Inc., a leading retail e-commerce provider in South Korea, for $61 million, including direct transaction costs of
approximately $1 million. During the year ended December 31, 2007, the Company acquired additional shares in
Gmarket for $8 million. As of December 31, 2007, the Company held an approximate 10 percent ownership interest
in Gmarket, with an investment cost base totaling $69 million.
Other Acquisitions — Business Combinations. During the year ended December 31, 2006, the Company acquired
three other companies which were accounted for as business combinations. The total purchase price for these three
acquisitions was $42 million and consisted of $41 million in cash consideration and $1 million of direct transaction
costs. The total cash consideration of $41 million less cash acquired of $1 million resulted in net cash outlay of
$40 million. Of the purchase price, $27 million was allocated to goodwill, $21 million to amortizable intangible
assets, and $6 million to net assumed liabilities. In connection with these business combinations, the Company also
issued stock-based awards valued at $24 million that is being recognized as compensation expense over a period of
three years. Goodwill represents the excess of the purchase price over the fair value of the net tangible and
intangible assets acquired and is not deductible for tax purposes.
During the year ended December 31, 2006, the Company also completed immaterial asset acquisitions that did not
qualify as business combinations.
Transactions completed in 2007
Right Media. On July 11, 2007, the Company acquired Right Media Inc. (“Right Media”), an online advertising
exchange. The Company believes the acquisition of Right Media is an integral piece of the Company’s strategy to
build the industry’s leading advertising and publishing network and is a key step in executing the Company’s long-
term strategy to change how online advertisers and publishers connect to their audiences in one open advertising
community. The purchase price exceeded the fair value of net tangible and intangible assets acquired from Right
Media and as a result, the Company recorded goodwill in connection with this transaction. Under the terms of the
agreement, the Company acquired all of the remaining equity interests (including all outstanding options and
restricted stock units) in Right Media. Right Media stockholders were paid in approximately equal parts cash and
shares of Yahoo! common stock (approximately 8 million shares) and outstanding Right Media options and
restricted stock units were assumed. Assumed Right Media options and restricted stock units are exercisable for, or
will settle in, shares of Yahoo! common stock. The acquisition followed the Company’s 20 percent investment in
Right Media in October 2006.
The total purchase price of $526 million consisted of $246 million in cash consideration, $237 million in equity
consideration, $40 million for the initial 20 percent investment, and $3 million of direct transaction costs. The
$246 million of total cash consideration less cash acquired of $16 million resulted in a net cash outlay of
$230 million. In connection with the acquisition, the Company issued stock-based awards valued at $177 million
which is being recognized as stock-based compensation expense as the awards vest over a period of up to four years.
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Yahoo! Inc.
Notes to Consolidated Financial Statements — (Continued)