Yahoo’s Excalibur IP search, mobile and other patents valued at $740M

The slow progression of the sale of Yahoo to Verizon — first announced in July 2016 but delayed in part because of massive data breach disclosures — took one more step forward today. Yahoo has filed a lengthy 8-K update with the SEC with many details about the future management of Altaba — the investment holding company left behind after the sale containing its Alibaba and other stakes — and with it, we’ve found out some new details.

The official value of Excalibur IP — the thousands of “non-core” patents that Verizon is not buying but is getting an indefinite license to use — is $740 million as of December 31, representing 1.4 percent of Altaba’s total assets as of that date.

For context, assets that will be a part of Altaba were worth $52.9 billion as of December 31, the report noted, with the company’s Alibaba investment taking up the lion’s share at nearly 62 percent. Once the deal with Verizon (which also owns TechCrunch) is completed, Thomas McInerney (the investor who led Yahoo’s strategic review) will lead Altaba as CEO, and the newly spun out company will trade under the AABA ticker.

Turning back to the patents, the valuation for Excalibur is notable because at one point, these were a pivotal part of how Yahoo had hoped to extricate itself from its financial problems.

Yahoo had once hoped to get bids of over $1 billion for the group of patents, which includes IP related to search, advertising, mobile, social networks, and content — a veritable roadmap of the many turns that Yahoo’s business took over the years.

As the SEC filing and Yahoo itself noted, selling the patents was one option that Yahoo had been considering as an alternative to spinning off its core business. As the 8-K further elaborates, there were some options in the subsequent sale bids for all of Yahoo that included the patents as part of the deal.

 Ultimately, though, Verizon opted for a deal that didn’t include ownership but just a license that is “non-exclusive, worldwide, perpetual, irrevocable, royalty-free [and] fully paid-up” both for Verizon as well as current and future affiliates.

While the effort to sell or further license the Excalibur may have paused as Yahoo works through its Verizon sale, it doesn’t appear to have ended altogether. “Yahoo will retain the Excalibur IP Assets and will be able to seek to monetize the Excalibur IP Assets before or after completion of the Sale Transaction,” the company notes.

There have been reports since last summer — after it emerged that Yahoo transferred 2,648 patents into a then-mysterious Excalibur entity — that companies like Google’s parent company Alphabet and Microsoft are among those interested in buying the IP.

The group contains some notable IP, including the patent that was once the subject of a lawsuit that Yahoo filed against Google related to search-based advertising. Google paid Yahoo around $330 million back in 2004 to settle the original suit.

“Today’s filing represents an important step forward in the process of completing our transaction with Verizon. We will continue to move ahead expeditiously toward the closing, which we expect to occur in the second quarter of 2017,” a Yahoo spokesperson said in a statement.