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Yahoo-Google: Defining A Change In Control; Google’s Revenue Guarantee

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imageYahoo’s (NSDQ: YHOO) ad outsourcing deal with Google (NSDQ: GOOG) does not necessarily preclude a sale to Microsoft (NSDQ: MSFT) down the road. In a filing made this morning, the company explains what exactly constitutes a change in control, which would allow Yahoo to get out of the deal. Beyond that, the company enumerates other triggers that can prompt a termination include legal action related to anti-competitiveness, a court order, a material breach by either party, or if Google does not realize a minimum threshold revenue: “Google may terminate the Services Agreement if, after ten months after the Services are first launched, and each month thereafter, the gross revenues recognized by Google under the Services Agreement are less than $83,333,333 for the four prior calendar months.” ($250 million per year.)

Change in Control Definition: For the purposes of this agreement, a change in control is defined as any other party gaining more than 50 percent control of one of the companies. But: In the case of Microsoft, that is lowered to just 15 percent. And if Microsoft were to acquire a stake directly from Yahoo, then the bar is dropped to: “5 percent or more of the total equity value of the party or 1 percent or more of the party