Yahoo wants to spin off Yahoo, become a holding company for Alibaba shares

Yahoo logoOne of Yahoos best decisions was investing in a large chunk of Chinese e-commerce company Alibaba before it went public last year. Alibaba broke records with its initial public offering, and now Yahoos 15 percent stake in the company is worth $31 billion, according to the New York Times.

For the past year, CEO Marissa Mayer and Yahoos Board of Directors have been working to make that chunk of their business more valuable for investors, originally planning to spin-off the Alibaba shares into a separate holding company. But according to Nasdaq, in September the US Internal Revenue Service "declined to grant advance approval for the tax-free spin-off of Alibaba.

This morning, Yahoos Board of Directors announced that it would reverse course, instead spinning Yahoos core businesses off and leaving the original Yahoo as a holding company for Alibaba shares. Yahoos assets and liabilities would form a separate public company, "the stock of which would be distributed pro rata to Yahoo shareholders, Yahoo wrote in its press release.

The spin-off could take up to a year to complete and will require Yahoo to obtain audits, shareholder approval, and approval from the US Securities and Exchange Commission to go forward with the plan.

In a statement, Mayer said, "In 2016, we will tighten our focus and prioritize investments to drive profitability and long-term growth. A separation from our Alibaba stake, via the reverse spin, will provide more transparency into the value of Yahoos business. Some have suggested that this transparency translates into an effort to sell off Yahoos core business bit by bit.

After Yahoos stake in Alibaba, the New York Times notes that its next most valuable asset is its stake in Yahoo Japan, worth approximately $8.5 billion. "The rest of Yahoo is worth $3 billion to $8 billion, according to analysts estimates, the Times writes.

Source: Ars Technica

Tags: Yahoo

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