Yahoo Board Contemplating Selling Core Business: Shares Surge

As previously reported, Yahoo is said to be having meetings this week about the possibility of selling off its core business and/or getting more out of its stake in Alibaba Group Holding.

Ad-technology investor Dave Morgan, chief executive of Simulmedia, suggested declining tech valuations may be hastening the the Yahoo! board.

Any buyer would have to contend with the complication surrounding the Alibaba stake. Selling the traditional business is seen as one way possibly to achieve that.

In September, Yahoo’s plans for the spinoff of its stake in Alibaba hit a roadblock when the U.S. Internal Revenue Service denied a request to bless the transaction as a tax-free deal.

“Realising value is far from assured, however”, Pivotal analyst Brian Wieser wrote in a note.

The big question is whether anyone would actually show up with a meaningful bid.

Among the companies that would likely explore a purchase are Verizon Communications Inc. and Barry Diller’sIAC/InterActive Corp. The CEO has hired management consultant McKinsey & Co.to look for areas of the company to cut, said a person familiar with the matter.

Yahoo Japan would consider any options for buying back its shares, said spokesman Masaki Hanyu.

Yahoo’s board is considering an activist shareholder’s demand to sell the Internet services the company is best known for, a maneuver that might help the company dodge a tax bill of more than $10 billion looming over its holdings in China’s Alibaba Group.

Yahoo has planned to spin off its 15pc stake in Alibaba, but has run into difficulties over the taxes such a move would accrue, with American authorities warning that its elaborate restructuring plan created to avoid taxes on a spinoff would not pass muster.

Mayer, who took charge of the troubled Internet pioneer three years ago, has been trying hard to revive growth at Yahoo.

“These things don’t get forgotten easily”, Pyykkonen said. But those still betting on her may have lingered too long: The stock is down 50 per cent since November 2014, and much of the long upward trajectory was funded by an aggressive share buyback program.

Every moment heading up towards the meeting is being watched closely by analysts, industry experts and the media as this could turn out to be the final nail in the coffin for the tenure of Marissa Mayer as Yahoo CEO. Yahoo’s stock price has dropped 35 percent this year.