Marissa Meyer said she won’t step down from Yahoo following Alibaba shakeup

Inc is changing course. Rather, the company will spin off its Web business into a separate, publicly traded company.

Investors were unenthusiastic as they digested the complexity of the “reverse spin-off”.

If the transaction ultimately is taxed, the bill would be a lot smaller for the Yahoo core plus Yahoo Japan entity than the original plan to spin off its Alibaba stake.

Separately, Yahoo said that one of its directors, Max Levchin, had resigned to focus on his duties as chief executive of Affirm, an online lending company. It may take more than a year before Yahoo shareholders get stock in a newly formed company that has yet to be named. Even if it’s taxed on the spinoff of its Internet business, the cost would be significantly less.

“This makes unbelievable sense”, Levine said. “Many companies would have put in so much work, time, effort and money pursuing the Alibaba spinoff”.

Investor’s didn’t cheer the move.

Yahoo shares were up 2 percent at $35.53 in premarket trading.

Activist investors have launched 342 campaigns against corporations so far this year, up 61 percent since 2009.

The company will now aim to spin off its struggling Internet business – essentially, everything associated with the Yahoo brand name – into a new company.

Yahoo could not immediately be reached for comment.

Yahoo suggested it wasn’t entirely swayed by Starboard. “I am committed to seeing it through”, she said.

However in recent weeks there has been uncertainty about whether or not a spin-off of the stake, worth some $32 billion, would be taxed – with investors fearing a high tax bill and activist Yahoo shareholders threatening a fight.

Suitors might include AT&T Inc., Verizon Communications, Comcast Corp., IAC/InterActiveCorp and private equity firms that specialize in buying troubled companies.

“Among other factors, we were concerned about the market’s perception of tax risk, which would have impaired the value of Aabaco stock until resolved”, Yahoo Chairman Maynard Webb explained in a news release.

But Yahoo.com nonetheless ranks fifth when it comes to every day visits, in accordance to monitoring agency Alexa, and this might make it a lovely goal for a telecom service or personal fairness. SoftBank CEO Masayoshi Son would likely want to control the outcome of Yahoo’s US$8.6 billion stake in Yahoo Japan, to ensure it doesn’t fall into the hands of an adversary, as it accounts for nearly a quarter of SoftBank’s operating profits. Or Yahoo’s parts could be divvied up among different parties. “We believe that we are tremendously undervalued and we think the best path to unlocking that value is by separating the Alibaba assets from our operating businesses and also turning around the performance in our operating business”, Webb said during a Wednesday conference call. Analyst Andrew Frank believes Yahoo can perform better as a media company than a technology company.

If a reverse spin off is successful, it would need to clear a number of hurdles, including third party consents and shareholder approval. After all of that is complete, Yahoo said it could still take over a year for the process to go through. The question is whether Mayer can use this additional year to fulfill Yahoo’s potential.

“This is now the politically correct way to say that they are ready to accept offers”, said Chris Bulger, an independent tech banker based in Boston who has no affiliation with Yahoo.

Yahoo has struggled to develop its Internet enterprise, which incorporates promoting search and show advertisements on its information and sports activities websites and e mail service, within the face of competitors from Alphabet Inc’s Google and Facebook Inc. By creating a separate company, the value of those businesses would be more apparent to investors – and easier to sell.