Since the company would not be selling its Alibaba stake, which is valued at $31 billion, Yahoo! would consider selling its core Internet operations instead.
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Under the revised plan, Yahoo shareholders would still end up with stock in two companies. In a statement announcing the decision, Maynard Webb, chairman of Yahoo’s board of directors, said in a statement issued Wednesday that the company was dissuaded from spinning off its position in Alibaba because of tax concerns from investors. It’s subject to a long list of approvals, including “third-party consents, preparation of audited financial statements, shareholder approval, and SEC filings and clearance”, according to the statement from Yahoo’s board.
Yahoo wants to separate its stake in Alibaba with its core businesses.
Yahoo announced Wednesday that it has opted not to spin off its 15% stake-worth more than $30 billion-in Alibaba, China’s leading e-commerce company.
Mayer had hoped to buy more time with the Alibaba spinoff, which had been set as tax-free shelter for Yahoo’s 384 million shares in the Chinese company.
Yahoo is now pursuing a different course that could make it easier to eventually sell its Internet operations, the business that now generates virtually all of Yahoo’s revenue. She also reiterated she is “taking further steps to tighten our focus and prioritise our investments to drive growth”. McAdam said, “If it turned out that parts of it, or all of it were for sale, we’d look at it like anything in the digital media area at this point, because it’s so hot”. Wall Street “either discounts the tax benefits of the proposed spinoff and/or, worse, implies a significantly negative value for the core business based on a justifiable fear that the current turnaround efforts will fail and current management will continue to squander the company’s resources”, he added.
Mayer said that she’s happy with the achievement that the company has made since becoming CEO. Activist investor Starboard Value LP asked the company in November to drop its plans and sell its core search and display ad businesses instead.
Shares of Yahoo rose about 2 percent in premarket trading. Most of those dollars, though, have been flowing to Google and Facebook. It may take more than a year before Yahoo shareholders get stock in a newly formed company that has yet to be named. That has dashed widespread speculation of Alibaba edging closer to a acquisition of Yahoo’s core online search business. In October 2011, Ma told an audience at Stanford University in California that he would be “very interested in Yahoo because our Alibaba Group is so important to Yahoo, and Yahoo is also very important to us”.
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The difference between no tax on the Alibaba stake and a 40% capital gains tax was more than $9 billion, according to CNBC. Mayer remained confident that Yahoo could still accomplish this following a spinoff into a new company.
