Yahoo going back to the drawing board with Alibaba spinoff

The maneuver, though, could leave the CEO without a seat at the Yahoo table, and meanwhile the Chronicle performed a sort of corrective to inflated reports of a possibly hefty severance package for Mayer. And when the value emerges, Yahoo will be ready for sale, stripped of its Alibaba shares.

It believed the move would have been tax-free, but investors were anxious that it could cost shareholders billions in taxes, in the absence of assurances from the U.S. tax authorities.

YAHOO is scrapping its original plan to spin off its prized stake in China’s Alibaba Group and will instead explore an alternative breakup that could make it easier to eventually sell its internet business.

The thinking being this reverse spin off route is less likely to spook investors and the markets with fears of Yahoo incurring a big tax bill.

He said this spinoff maneuver may take more than a year to complete and be mired in a complex process of approvals and contract negotiations.

Asked on CNBC if the board retains full confidence in Mayer after her three years at the helm, Webb said: “Absolutely…” She also reiterated she is “taking further steps to tighten our focus and prioritise our investments to drive growth”.

The new publicly traded firm will home Yahoo’s Internet enterprise and its 35 % stake in Yahoo Japan 4689.T , value about $ 8.5 billion at present change charges. Even as Yahoo capitulated to concerns about the tax implications of Alibaba, the company believes the previously announced plan would have been tax free for shareholders, Chairman Maynard Webb said in a statement.

Does it find a buyer, or another firm with whom it can merge?

Yahoo CEO Marissa Mayer on the call also stressed the importance of “delivering shareholder value” by separating out the Alibaba stake to unlock hidden stock value in the company.

“As an industry, this signifies the end of the static Web”, said Patrick Moorhead, an analyst with Moor Insights & Strategy.

Yahoo has struggled to grow its Internet business, which includes selling search and display ads on its news and sports sites and email service, in the face of competition from Alphabet Inc’s (GOOGL.O) Google and Facebook Inc (FB.O).

“In addition to our efforts to increase value and diminish uncertainty for investors, the ultimate separation of our Alibaba stake will be important to our continued business transformation”, Mayer said. “Given the dimensions and belongings I assume a sale is much less possible, however might create tax efficiencies for the customer in the event that they needed to divest sure belongings”.

Separately, Yahoo said Max Levchin resigned from the board, and will instead focus on his responsibilities as the CEO of payments company Affirm Inc. Mayer has adopted multiple strategies, which ReCode called “convoluted”, to try to turn the company into a media content business.

Yahoo has a 15 percent stake in the Chinese e-commerce giant Alibaba.

Yahoo was disappointed when it learned that the IRS would not agree to the simpler sale but informed regulators that it was determined to pursue the plan for a spinoff. On Monday, the chief financial officer of Verizon Communications Inc said the No. 1 US wireless carrier could look at buying Yahoo’s core business, but made no mention of a price.

A spin-off of Yahoo’s Web business might have more symbolic significance than anything else.