Google is creating a new publicly traded parent company called Alphabet Inc. that will be run by Google co-founders Larry Page and Sergey Brin.
Google will become a subsidiary of Alphabet and is getting a new CEO in Sundar Pichai.
“Our company is operating well today, but we think we can make it cleaner and more accountable,” Page wrote in a letter to the SEC which included in a regulatory filing on Monday afternoon.
Alphabet will be a “collection” of companies, the largest of which is Google, Page said. But Google will be “slimmed down,” excluding companies that are not part of its core Internet business. This means Google’s foray into the life sciences with glucose sensing contact lenses, its focus on extending human life with Calico, and it car plans will not be part of Google.
“Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related,” Page said.
Larry Page, co-founder and chief executive of Google, will become Alphabet’s chief executive. Sergey Brin, the other co-founder of Google, will be the new company’s president, and Eric Schmidt, Google’s executive chairman, will hold the same post at Alphabet. Google’s new chief financial officer Ruth Porat will become CFO of Alphabet and Google’s current directors will become directors of Alphabet.
A “strong” CEO will run each of the Alphabet businesses with assistance from Page and Brin, Page said. That includes Google which will be run by Pichai, Page’s top lieutenant.
The news announced after the close of trading on Monday took Wall Street by surprise. Google GOOG shares rose 6% in after-hours trading on Monday. Google made the announcement after trading ended for the day.
Google will be a wholly owned subsidiary of Alphabet. The two share classes will remain GOOGL and GOOG.
