Yahoo 2015 Annual Report Download - page 120

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 76,566
Amortizable intangible assets:
Developed technology 23,700
Customer contracts and related relationships 182,400
Tradename 56,500
Goodwill 748,979
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 four 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 four 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 four
years, also provided that he remains an employee of the Company. Such cash payments are being
recognized as compensation expense over the four-year service period.
The amortizable intangible assets have useful lives not exceeding six years and a weighted average
useful life of six years. The purchase price exceeded the estimated fair value of the tangible and
identifiable intangible assets and liabilities acquired and, as a result of the allocation, the Company
recorded goodwill of $749 million in connection with this transaction. 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 $95 million to amortizable intangible assets, $2 million to cash acquired,
$44 million to other tangible assets, $34 million to assumed liabilities, and the remainder of $170
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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