Google’s SEC filing on the big shake-up:
On August 10, 2015, Google Inc. (“Google”) announced plans to
create a new public holding company, Alphabet Inc. (“Alphabet”),
and a new operating structure to increase management scale and
focus on its consolidated businesses. Under the new operating
structure, its main Google business will include search, ads,
maps, apps, YouTube and Android and the related technical
infrastructure (the “Google business”). Businesses such as Calico,
Nest, and Fiber, as well as its investing arms, such as Google
Ventures and Google Capital, and incubator projects, such as
Google X, will be managed separately from the Google business.
Here are the legal nuts and bolts:
Later this year, Google intends to implement a holding company
reorganization (the “Alphabet Merger”), which will result in
Alphabet owning all of the capital stock of Google. Alphabet will
initially be a direct, wholly owned subsidiary of Google. Pursuant
to the Alphabet Merger, a newly formed entity (“Merger Sub”), a
direct, wholly owned subsidiary of Alphabet and an indirect,
wholly owned subsidiary of Google, will merge with and into
Google, with Google surviving as a direct, wholly owned subsidiary
of Alphabet. Each share of each class of Google stock issued and
outstanding immediately prior to the Alphabet Merger will
automatically convert into an equivalent corresponding share of
Alphabet stock, having the same designations, rights, powers and
preferences and the qualifications, limitations and restrictions
as the corresponding share of Google stock being converted.
Accordingly, upon consummation of the Alphabet Merger, Google’s
current stockholders will become stockholders of Alphabet. The
stockholders of Google will not recognize gain or loss for U.S.
federal income tax purposes upon the conversion of their shares in
the Alphabet Merger.
So Alphabet starts as a Google subsidiary, then they make a subsidiary of Alphabet, then that subsidiary of Alphabet will “merge with and into Google”, and then Google will be an Alphabet subsidiary.
In the end, what are now shares of Google will be shares of Alphabet, so I think it’s fair to say they’re changing the name of the parent company and refocusing what “Google” means and does. But the logic of a subsidiary of a subsidiary “merging with and into” the parent company, leaving the first subsidiary the new parent, somehow reminds me of the deals I made as a kid playing Monopoly.
★ Monday, 10 August 2015