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Yahoo to exit internet business and keep Alibaba stake, CNBC says
Posted On Dec 08 2015
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Yahoo, the internet company, has performed a dramatic U-turn and abandoned plans to spin off its $32bn (£21bn) stake in Chinese e-tailer Alibaba, according to reports.
An announcement by the company could come as early as Wednesday, the network said, citing unnamed “sources”. But perhaps the biggest elephant in the room was what would the board decide to do about its 15 percent holdings in Alibaba, estimated to be worth around $32 billion.
There was no immediate comment on the report from Yahoo. But investors have become increasingly anxious that the transaction might not receive the tax-free treatment Yahoo hoped for and could result in a hefty, multi-billion dollar tax bill. But Verizon’s Chief Financial Officer Fran Shammo said Monday that he would “look at it”, even if a discussion is premature.
The spinoff was projected to be a cash windfall for Yahoo – although it was questionable how and where the company, helmed by CEO Marissa Mayer since 2012, would have deployed its new resources.
According to CNBC, Yahoo will look to possibly part with its core business, something observers and pundits believe does not have any real value when you look at what’s left after parting ways with Alibaba and other equity interests. And while its core business may be keeping its stock price down, it’s hard to say how much Yahoo might get from its sale – if it’s worth anything at all.
The report came as activist investors have been expressing doubts that chief executive Marissa Mayer could turn around the struggling company and urged the board to sell its Web business to the highest bidder. The two stock positions accounted for 94% of Yahoo’s $31.2 billion enterprise value, he said in a letter to the company three weeks ago. If it were to hold to that time frame, Yahoo would need to notify its creditors 35 trading days before selling Alibaba. But the company’s revenue remains stagnant and the company has failed to develop popular new services or mobile applications.
