Yahoo shelves plans to spin off stake in Alibaba

Yahoo CEO Marissa Mayer
After three days of debates, Internet search firm Yahoo Inc has shelved plans to spin off its stake in Chinese e-commerce giant Alibaba Group Holding.

The digital media company clarified that it had no plans to sell its core business. Yahoo.com ranks fifth in terms of daily visits, according to web monitoring firm Alexa. AT&T and Verizon Communications could be possible buyers for the Internet business if the board decides to put the internet business for sale. Verizon said it could look at buying Yahoo’s core business if it was a strategic fit.

“There is no determination by the board to sell the company or any part of it,” said Yahoo Chairman Maynard Webb, on a call with investors. “We believe that the business remains very undervalued, and we are focused on realizing and unlocking that value.”

Yahoo is looking at creating a separate company to hold the rest of its assets. With this move, Yahoo would become a holding company for its $32 billion stake in Chinese e-commerce giant Alibaba.

It seems Yahoo Chief Executive Officer Marissa Mayer will retain her job for the time being though her strategies are not getting enough support from the nine-member board.

The new publicly traded company will house Yahoo’s Internet business and its 35 percent stake in Yahoo Japan, worth about $8.5 billion.

Its Alibaba stake, worth more than $30 billion, accounts for the bulk of Yahoo’s current market value of $32 billion.
The creation of a new entity would take a year or more will likely take Mayer’s focus away from turning around the Internet business. Mayer had planned to use the proceeds from the sale of the Alibaba stake to expand the company’s mobile, video and social media offerings, AP reported.

Yahoo had intended to spin off its Alibaba stake by January, but investors, lacking assurance from the U.S. Internal Revenue Service, were worried that a spinoff could cost them billions in taxes. If Yahoo is taxed on the gains in its original $1 billion investment, the bill would exceed more than $10 billion, Reuters reported.

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