In a proxy statement, Yahoo invited shareholders to a special, as-yet unscheduled meeting to approve the Verizon deal.
The deal comes as Yahoo faces increased pressure to sell from investors frustrated by the company’s stalled turnaround. For Verizon, the deal offers a chance to expand beyond being a telephone and internet provider and into digital media and advertising.
The proxy filing included an almost 13,000-word accounting of the sale process, which kicked off on Feb. 2 when Yahoo said it would explore “strategic alternatives.” The filing shows that few if any bidders wanted Yahoo in its entirety, and the bulk of the offers came from financial firms.
In the filing, Yahoo revealed that a senior executive at SoftBank in February approached Chief Executive Marissa Mayer about a possible deal involving Yahoo and Yahoo Japan. Separately, a senior executive at Verizon approached Yahoo Chairman Maynard Webb about a possible transaction.
Banking advisers to Yahoo spoke to 51 parties about a potential transaction, and 32 signed confidentially agreements with Yahoo between Feb. 19 and April 6, including “10 strategic parties and 22 financial sponsors,” according to the filing.
Mr. Webb and Ms. Mayer met representatives of SoftBank on Feb. 25, during which they received a letter from Yahoo Japan proposing a “merger of equals” between Yahoo and Yahoo Japan, according to the filing. SoftBank owns the largest stake in Yahoo Japan with 43%, while Yahoo holds 35%.
Under the proposal, Yahoo shareholders would get a 50% stake in the combined entity and about $14 billion in cash, giving Yahoo an equity value of $29.05 a share. Yahoo Japan’s board also envisioned that Alibaba Group Holding Ltd. BABA -2.88 % would agree to buy back 50% of Yahoo’s stake in the Chinese e-commerce company over six years.
Ms. Mayer, advisers and Yahoo directors serving on a strategic review committee discussed the deal over the next four days but ultimately turned it down. SoftBank and Yahoo Japan each declined to discuss other options.
Starting in mid-March, seven parties, including Verizon, attended half-day presentations from Yahoo management in Palo Alto, Calif. Then, on March 24, hedge fund Starboard Value LP notified Yahoo that it was seeking to replace Yahoo’s entire board.
Starting April 4, the strategic review committee spoke to Yahoo executives including Ms. Mayer almost daily. Over the course of April, the field of bidders whittled down to 19. One party offered to make a strategic investment in Yahoo between $1 billion and $2 billion, which was rejected.
On April 18, 14 parties submitted initial proposals, ranging from $2 billion to $8 billion. Some were willing to assume Yahoo’s patents as well as its real estate; others were only willing to take one or the other. At the time, Verizon’s bid amounted to $3.75 billion, including both patents and real estate, among the lowest offers.
The filing doesn’t name any other bidder besides Verizon, though The Wall Street Journal and others reported the potential suitors included AT&T Inc., T -3.59 % private-equity firms TPG, Advent International and Vista Equity Partners, as well as a group led by Quicken Loans founder Dan Gilbert.
Over the course of the next few months, potential buyers dropped out or lowered their bids. By mid-July, there were just five parties left in the race, including Verizon. Three parties—described as Strategic Party B, Sponsor A and Sponsor F—all reduced their initial offers, according to the filing.
Verizon, however, increased its base price to $4.83 billion. The board agreed the offer was superior, and a deal was struck on July 23. The two sides announced the deal two days later.
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