Yahoo Inc filed formal documents late on Friday to spin off its 15 percent stake in Alibaba Group Holding Ltd (阿里巴巴), the Chinese e-commerce giant, in the fourth quarter of this year.
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Included in the spin-off is Yahoo’s small business services division, which provides web hosting and web design services for small businesses.
Yahoo reportedly decided to spin-off Alibaba to maximize the value of the investment to its shareholders, while avoiding a large tax burden. Yahoo is headquartered in Sunnyvale, California, and has offices located throughout the Americas, Asia Pacific (APAC) and the Europe, Middle East and Africa (EMEA) regions. In a filing before the Securities and Exchange Commission (SEC), Yahoo named the spin-off company Aabaco Holdings, which will hold the 384 million Alibaba shares worth $32 billion owned by Yahoo.
In May, Yahoo stock tanked when Bloomberg reported that the IRS was changing its policy on tax-free spinoffs.
The employees, directors, and officers of Yahoo who own shares of the company’s common stock on the record date of the spin-off will receive shares of the common stock of Aabaco Holdings in the same ratio as other shareholders. Doing so would prevent Yahoo from incurring a $10 billion tax that it would otherwise incur if it simply sold the stock and transferred the cash to shareholders.
Basically, Yahoo is tossing its Alibaba stock and a minor part of its operations into a new corporate entity.
The fund plans to invest at least 80% of its total assets in Alibaba shares under normal market conditions.
Yahoo bought a 40-per cent stake in the Chinese company in 2005 for $1 billion.
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Friday’s filing does not specify a date for the spin-off.
