It looks like only half of the rumors about Yahoo’s plans for the future were true. While the company has confirmed that it’s abandoning its plan to spin off its stake in Alibaba, which is the Chinese equivalent of Amazon, it won’t be selling off its core business. Instead, the core business, as well as pretty much anything that isn’t Alibaba, will be spun off into a new company, which will create two independent, publicly-traded companies. Yahoo appears to be set on this decision, but it will take more than a year to receive both regulatory and shareholder approval for the decision, which is a damn shame for all those companies that were lining up to acquire Yahoo.
Yahoo has today confirmed rumors it is scrapping a plan to spin off its stake in Chinese ecommerce company Alibaba. Its shares are up in pre-market trading on the news. The Yahoo board had been reported to be considering its options on this front this month. An earlier rumor of this plan 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. However 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. It said it will instead work on the reverse option for separating the stake — which means it’s planning 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. The thinking being this reverse spin off route is less likely to spook investors and the markets with fears of Yahoo incurring a big tax bill.