Yahoo 2013 Annual Report Download - page 100

Transactions completed in 2013
Tumblr. On June 19, 2013, the Company completed the acquisition of Tumblr, Inc. (“Tumblr”), a blog-hosting
Website that allows users to post their own content as well as follow or re-blog posts made by other users. The
acquisition of Tumblr brought a community of new users to the Yahoo Network.
The purchase price exceeded the fair value of the net tangible and identifiable intangible assets acquired 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 equity interests (including all outstanding vested options) in Tumblr. Tumblr
stockholders and vested optionholders were paid in cash, outstanding Tumblr unvested options and restricted
stock units were assumed and converted into equivalent awards covering Yahoo common stock and a portion of
the Tumblr shares held by its founder were exchanged for Yahoo common stock.
The total purchase price of approximately $990 million consisted mainly of cash consideration. The allocation of
the purchase price of the assets acquired and liabilities assumed based on their fair values was as follows (in
thousands):
Cash and marketable securities acquired ............................................... $ 16,587
Other tangible assets acquired ........................................................ 73,780
Amortizable intangible assets:
Developed technology .......................................................... 23,700
Customer contracts and related relationships ........................................ 182,400
Trade name .................................................................. 56,500
Goodwill ........................................................................ 751,765
Total assets acquired ........................................................... 1,104,732
Liabilities assumed ................................................................ (114,521)
Total ....................................................................... $ 990,211
In connection with the acquisition, the Company is recognizing stock-based compensation expense of $70
million over a period of up to 4 years. This amount is comprised of assumed unvested stock options and
restricted stock units (which had an aggregate fair value of $29 million at the acquisition date), and Yahoo
common stock issued to Tumblr’s founder (which had a fair value of $41 million at the acquisition date). The
Yahoo common stock issued to Tumblr’s founder is subject to holdback and will be released over 4 years
provided he remains an employee of the Company. In addition, the transaction resulted in cash consideration of
$40 million to be paid to Tumblr’s founder over 4 years, also provided that he remains an employee of the
Company. Such cash payments are being recognized as compensation expense over the 4-year service period.
The amortizable intangible assets have useful lives not exceeding 6 years and a weighted average useful life of 6
years. No amounts have been allocated to in-process research and development and $752 million has been
allocated to goodwill. Goodwill represents the excess of the purchase price over the fair value of the net tangible
and identifiable intangible assets acquired and is not deductible for tax purposes. This acquisition brings a
community of users to the Yahoo Network by deploying Yahoo’s personalization technology and search
infrastructure to deliver relevant content to the Tumblr user base.
Other Acquisitions—Business Combinations. During the year ended December 31, 2013, the Company acquired
25 other companies, which were accounted for as business combinations. The total aggregate purchase price for
these other acquisitions was $279 million. The total cash consideration of $279 million less cash acquired of $2
million resulted in a net cash outlay of $277 million. The allocation of the purchase price of the assets and
liabilities assumed based on their estimated fair values was $76 million to amortizable intangible assets, $19
million to in-process research and development, $2 million to cash acquired, $33 million to other tangible assets,
$37 million to assumed liabilities, and the remainder of $186 million to goodwill. 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.
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