Yahoo confirmed Wednesday it will not pursue its planned spin-off of its stake in Alibaba and will instead look into the reverse: spinning off its core business and Yahoo Japan shares.
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After Yahoo’s stake in Alibaba, the New York Times notes that its next most valuable asset is its stake in Yahoo Japan, worth approximately $8.5 billion (£5.6 billion). “A separation from our Alibaba stake, via the reverse spin, will provide more transparency into the value of Yahoo’s business”. While Yahoo believed the transaction would have been tax-free, investors were concerned taxes would be high, and that would have been a drag on stock performance.
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Mayer promised investors that Yahoo! will “prioritise investments to drive profitability and long-term growth”.
Some reports say there could be interested buyers for some Yahoo assets, and Verizon’s top executive this week suggested the telecom giant may be interested in parts of Yahoo that could fit with its newly acquired AOL unit.
While Starboard originally supported the move, it has since urged the company to sell off the core business in view of tax concerns.
“We certainly appreciate simplicity, but the Alibaba shares would be taxable to Yahoo and would result in further taxation to our shareholders, so there would be double taxation”, said Mayer.
The move follows several days of meetings and the board has today announced that the tech giant’s internet business will now be put into a new company to be listed on the stock market instead.
Meanwhile, Yahoo also loses a key board member.
“However, in consideration of developments since the original spin off plan was announced and after significant deliberations, we are suspending work on the Aabaco spin off”. The spinoff is created to let Yahoo avoid paying billions of dollars in future taxes. Yahoo’s stock price has dipped by 32 per cent this year. That means other companies will get to know a lot more about divisions of Yahoo and what they’re worth, and it’s possible that they’ll make offers to pick it apart.
Its different properties including Yahoo News and Yahoo Mail are together the third most visited sites in the Internet in the USA with visitors over more than 210 million during October.
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May 20, 2012: Yahoo agrees to sell half of its prized stake in Alibaba for about $7.1 billion. Yahoo trails just Google and Facebook in that race.
