Yahoo is suspending plans to spin off its investment in Chinese firm Alibaba and is looking into a sale of its core business, according to a CNBC report on Tuesday. Yahoo has faced pressure from activist investor Starboard Value LP to sell the core business rather than proceed with the planned spin-off of its stake in Alibaba, which could trigger large tax payments.
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TechCrunch has reached out to Yahoo and will update this story if we hear back. Yahoo’s market valuation is about $31 billion – but its stakes in Alibaba and Yahoo Japan are worth a combined $38 billion, leaving its core business worth less than zero.
Yahoo had been pressured in the past by activist investors from Starboard to spin off Alibaba, saying that it would be a “good first step”, but months later, recanted and demanded that Alibaba remain a part of Yahoo. The current stake of some 15 percent is now worth around $30 billion.
Yahoo stock was up more than 2.5% in after-hours trading Tuesday, following the CNBC report, after rising 0.5% in Tuesday’s regular session.
The CNBC report, which cited sources, did not disclose a possible price but said an announcement is expected on Wednesday. But Verizon’s Chief Financial Officer Fran Shammo said Monday that he would “look at it”, even if a discussion is premature.
In January, announcing the Alibaba plan, Mayer said the deal would be tax-free, but the U.S. Internal Revenue Service has declined to verify that. During the Yahoo board of directors’ regular end-of-year meetings last week, the directors weighed the various options. If Yahoo sells its advertising and search business, the remainder would be cash and its shares in Yahoo Japan and Alibaba. Author Ray Wang discusses whether Marissa Mayer still has support at YahooCCTV America’s Mark Niu interviewed Constellation Research tech analyst Ray Wang Ray Yan and asked him about Mayer’s future at Yahoo.
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“This is a potential win-win for Marissa”, said Doshi.
