Alibaba and Yahoo were not immediately available for comment.
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Starboard’s latest idea is for Yahoo to sell its websites, mobile applications, ad services and data analytics so it can abandon a plan to spin off its 15 percent stake in Alibaba, a thriving e-commerce company.
Yahoo’s board, in a three-day meeting that started on Wednesday, is weighing a sale of the company’s Internet business, Reuters reported on Tuesday, citing a person familiar with the matter. The company’s board includes Co-Founder David Filo, H. Lee Scott Jr., former chief executive of Wal-Mart Stores, and Charles Schwab Chairman Charles R. Schwab. According to the Wall Street Journal, Verizon and IAC/InterActiveCorp are potential bidders. Yahoo’s holding in Alibaba is now valued at about $30 billion.
Yahoo’s core business has not been very strong, despite a turnaround effort by Mayer, including a search advertising agreement with rival Google announced in October. This was supposed to be a tax-free way to reward Yahoo shareholders. Yahoo said the deal would be tax-free, but the U.S. Internal Revenue Service has declined to verify that.
Unnamed sources are saying that the board will not make a final decision about a spinoff until receiving more information and clarity on the tax. Yahoo had earlier planned to complete an Alibaba spinoff by the end of December.
“It remains unclear if the IRS will tax the spin-out of Aabaco, but in our view, a taxed transaction on a likely $3-$5b sale of the core Yahoo business outweighs the risk of the company/shareholders being hit with a $20b IRS tax bill on a spin-out of Aabaco”, write the firm’s Neil Doshi and Sam Phan.
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Cowen’s Internet industry research head John Blackledge said that Yahoo’s core business was expected to generate $780 million in 2016 after excluding taxes and other expenses.
