Google has announced a major restructuring of the company. Google will now be owned by a publicly traded umbrella company called Alphabet, which will be run by CEO Larry Page.
Sergey Brin will be president of the holding company, and Eric Schmidt will hold the title of Executive Chairman. Google’s new CEO will be Sundar Pichai.
Google will now report separate financial reports. The businesses that will operate under the Google name are search, ads, maps, apps, YouTube and Android. Businesses like Nest, Fiber, Google Ventures, Google Capital, and Google X will not be the responsibility of Google after the restructuring.
The solution differs from the typical strategies Wall Street bankers and activist investors favor, such as spinning off unrelated units or issuing tracking stocks. But it should give investors a clearer picture of how well Google’s core businesses are doing by reporting the expensive experiments separately. Under Delaware law, shareholders won’t get a chance to vote on the structural change, Google said.
The stock will convert to shares of Alphabet on a one-to-one basis. For example, those with 100 share of Google will end up with 100 shares of Alphabet, which will trade under the same GOOG and GOOGL symbols on NASDAQ.
Larry Page, Google co-founder, Alphabet CEO said,
“Our company is operating well today, but we think we can make it cleaner and more accountable. So we are creating a new company, called Alphabet. I am really excited to be running Alphabet as CEO with help from my capable partner, Sergey, as president.”
Investors love the change so far, with the stock up over $32 or more than 5% after-hours.
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