Yahoo shares are up in pre-market trading and it has also confirmed wide-spread rumours that it is scrapping a plan to spin off its stake in Chinese ecommerce company Alibaba.
An earlier rumour that the Yahoo board had been considering it’s options this month on that front caused Yahoo shares to spike 7 per cent.
CEO Marissa Mayer said in June the company would move forward with the spinoff of its stake in e-commerce giant Alibaba, having revealed a plan to do this at the start of this year.
But in recent weeks there has been uncertainty about whether or not a spin-off of the stake, worth some $32 billion, would be taxed — with investors fearing a high tax bill and activist Yahoo shareholders threatening a fight.
Today, after what the company said was “careful review and consideration of how to best drive long-term value for shareholders”, the Yahoo board has unanimously voted to suspend the plan to spin off the Alibaba stake.
Instead Mayer and her think tank have decided to work on the reverse option for separating the stake.
Plans are underway to transfer all Yahoo’s assets and liabilities other than the Alibaba stake (i.e. its core Internet business) to a newly formed company, thereby creating two separate, publicly-traded companies.
Responding to Yahoo’s plans, Andrew Frank, research VP analyst Gartner, told TechCrunch: “I think there’s still a possibility that Yahoo’s core business could continue to evolve independently into a successful diversified digital media company, but it seems clear there will be a lot of investor pressure if it takes this road.”
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