Yahoo Will Spin Off The Remaining Alibaba Stake
Yahoo’s CEO, Marissa Mayer has been facing quite some heat from the company shareholders due to constant decline in the company’s core advertising business. However, today’s move by her may increase her time at the position. Wall Street has been eagerly waiting to find out the plans of Yahoo regarding the value extraction from its Asian assets without paying any taxes.
Today, Mayer has revealed a plan to spin off the remaining 15 percent of stakes in China-based Alibaba Group Holding Ltd. After this spin-off which is scheduled to happen in the final quarter of this year, Yahoo will be able to continue to operate the core business and will hold 35.5% interest in Yahoo Japan.
This new company will own all of Yahoo’s remaining share in Alibaba. Furthermore, the company will not assume any debt and Yahoo will be able retain its cash. Once the deal is completed, the spin-off will enable shareholders to cash out of Alibaba stock on their own.
Mayer has stated in an interview that the plans for the spin-off was first discussed in the August of last year, and since then, the company has been aiming to make it a reality.
We homed in on the spinoff structure over the summer and we basically spent the fall really refining it. There were a lot of variations on the way to do the spin, what was included in the spin, was it a reverse spin or a straightforward spin, which is what we ultimately chose.
Shareholders as expected are quite happy with this move from Yahoo, and it has also helped the company to raise its share by 5.8 percent. This plan will allow Yahoo to save a ton of its money in taxes.
The investors would certainly be glad after this news but the decline in Yahoo’s ad business is still there and has to be worked on. It was reported on Tuesday that revenue of the fourth quarter excluding the commission paid to search partners has been declined by 2%.
Miss Mayers has a lot more issues to take care of, now that this one has been done and hopefully, she will be able to come up with the solutions just like she did today. The core business has been suffering for Yahoo, but I am certain that the company will try and come up with the better plan to make it work for everyone.
What do you think of this spin-off move by Yahoo’s CEO? Sound off in the comments below!