Date
27 May 2017
CEO Marissa Mayer wants to spin off Yahoo's US$30 billion stake in Alibaba, but the board appears to have rejected the plan. Photo: Bloomberg
CEO Marissa Mayer wants to spin off Yahoo's US$30 billion stake in Alibaba, but the board appears to have rejected the plan. Photo: Bloomberg

Yahoo will not spin off Alibaba stake, weighs core business sale

Yahoo Inc. is considering the sale of its core business but will not sell its stake in Alibaba Group Holding Ltd., CNBC reported, citing sources.

The moves represent a stark rejection of chief executive Marissa Mayer’s plans to sell the Alibaba stake and revive the internet unit focusing on growing mobile, video and social media ads, Reuters reported.

Yahoo’s shares rose more than 2 percent in after-hours trading, while Alibaba’s stock was up 1.3 percent.

Yahoo’s core business consists of its news sites, email service and products like Tumblr and its advertising technology.

Although the CNBC report did not disclose a possible price, analysts and bankers have estimated the unit could fetch between US$2 billion and $8 billion, with many seeing US$4 billion as the likely price.

Private equity, media and internet firms are potential buyers, they said.

Yahoo’s board of directors met for three days last week to discuss the company’s future direction.

Activist investor Starboard Value LP has urged Yahoo to sell its core business rather than proceed with the planned spin-off of its US$30 billion stake in Alibaba, which could trigger large tax payments.

“This was really a really good PR move by Starboard as the spinoff was highly unlikely anyway given the tax implications and they knew they could claim victory once Yahoo made the official announcement,” said Jim Osman of The Edge Consulting Group, a research firm that advises activist hedge funds.

Yahoo’s search and display ad businesses, which account for the lion’s share of its total revenue, have been struggling and Mayer’s efforts to revive the businesses have yielded few results.

– Contact us at [email protected]

RA/CG

EJI Weekly Newsletter

Please click here to unsubscribe