Firms circle as Yahoo considers sale of internet business

Such a sale would mark an abrupt change of plans at the company, which has been trying to revitalize its business for more than three years under CEO Marissa Mayer, while spinning off the ancillary Asian investments in a transaction expected to close in January. Mayer did bring to the company a renewed focus on product innovation and driving user experience and advertising.

Yahoo stock did in fact jump in value by six per cent overnight on Wall Street in a positive reaction to the rumours, as investors favour plans to separate Yahoo and Alibaba without being hit by a punishing capital-gains tax demand.

“Its 15% stake in Alibaba is now worth about $32 billion, and its 35% stake in Yahoo Japan is now worth about $8.5 billion”.

Yahoo! Inc. (NASDAQ:YHOO)’s sites remain one of the most visited online even as the company continues to lose its grip on the digital advertising business. Yahoo could not immediately be reached for comment about the rumors. Yahoo Inc.is struggling to keep its head above the waters due to competition from rivals like Google and Facebook.

The board of Yahoo are meeting this week to decide whether or not to sell off its various divisions, except for its stake in Chinese e-commerce colossus Alibaba, held under a vehicle called Aabaco. That would leave it with the Alibaba stake and Yahoo Japan, which is a joint venture with SoftBank Group of Japan. It added that Alibaba would consider buying its own shares back from Yahoo, only if they come at a steep discount.

“And so are rumours that the board of the Silicon Valley internet giant is poised to sell off the entire core business”, she said.

But investors are nervous that the Alibaba spin-off might not get the tax-free treatment that Yahoo hopes, resulting in a hefty tax bill.

While Yahoo’s share price has more than doubled and widely outperformed the broader stock market since Mayer took over as president and CEO in July 2012, much of the long upward trajectory was funded by an aggressive share buyback program and its stakes in Alibaba and Yahoo Japan (4689.T). A number of hedge funds are rumoured to be in line or thinking of buying the core Yahoo business.

Is Yahoo about to sell itself?