Yahoo’s board will consider in a series of meetings from next Wednesday a potential sale of the company’s main internet businesses, the Wall Street Journal reported, citing people familiar with the matter.
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Yahoo! Inc. (NASDAQ:YHOO) has seen a boost in the market on talks of stake sale in Alibaba Group Holding Ltd. The decision is being mulled in the meeting of the Board of Members and it still remains to be seen whether the company will go for spinning their stake in the Chinese company. Tigress Financial Partners CIO Ivan Feinseth told reporters that should Yahoo decide to sell its Alibaba holdings and Mavens units, it would probably be the end for the once popular search engine giant.
CEO Marissa Mayer had planned to complete the spinoff by January and promised to update investors on her strategy for the rest of the ailing web portal.
The new plan could include parceling out Yahoo’s core business, which could fetch $6 billion to $8 billion, estimates SunTrust Robinson Humphreys Internet equity analyst Robert Peck.
Yet, for years now, Yahoo has desperately sought a reason for existing. In a letter dated November 19, Starboard estimated that Yahoo’s enterprise value is $31.2bn.
The company’s stake in Yahoo Japan is held at a 30 percent discount off its actual market value, while its Alibaba stake is held at about a 59 percent discount.
The plan to spin off Yahoo’s Alibaba holdings, now the prize of the company, has always been delayed due to uncertainty surrounding if the IRS could challenge the spinoff’s tax-free status, which could lead to a potential tax bill costing several billion dollars.
Apparently, no option is being left unconsidered. He declined to comment on the company’s potential interest in Yahoo assets.
Even as Mayer has been working on additional features to the smartphones and also unleashing new products in the marketing field to attract the marketers, the company is not doing too well. Yahoo only lags Google Inc. and Facebook Inc.
CNBC reported that Yahoo’s board of directors is considering selling the company’s online business or its shares in Alibaba or both of them. Yahoo’s core business also comes with a slew of talented engineers, many specialized in mobile development, who could benefit Facebook.
“Realizing value is far from assured, however”, Pivotal analyst Brian Wieser wrote in a note. “The company’s core business is in seemingly permanent decline”.
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The BABA stake could eventually be sold back to Alibaba, which would effectively act as a share buyback for BABA shareholders. AOL has specialized in helping third-party websites sell more ads, while Yahoo brings with it a vast pool of registration data and email addresses. The investor – one of the most prolific USA activists – typically targets small-and mid-cap public companies it considers undervalued, pushing executives and directors for changes such as unit spinoffs and asset sales.
