Yahoo reportedly mulling plans to scrap Alibaba spinoff
Struggling Internet search giant Yahoo Inc. is mulling plans to scrap long-planned spinoff of its stake in Chinese e-commerce firm Alibaba Group Holding Ltd., people familiar with the matter revealed.
Requesting anonymity, sources said Yahoo would likely scrap plan to divest its stake in Alibaba due to pressure from investors who are concerned about the tax risks linked to the deal. Instead, the company will explore a spinoff of its core Internet businesses.
Yahoo owns just 15 per cent of Alibaba but the stake has a market value of more than $30 billion. Yahoo's total market value is around $33 billion.
According to market analysts, Yahoo's core Internet business could attract a valuation of $3.5 billion or more, depending on the purchaser. But some believe that it would not attract more than $2 billion.
The plan to spin off Yahoo's stake in Alibaba was first announced in January. In October, Mayer said the stake could be divested by November. But investors grew concerned about the planned transaction when the company failed to obtain approval from the U. S. Internal Revenue Service (IRS) on its tax-free status. If the company goes forward with the plan, it could be slapped with a tax bill of up to $10 billion.
Yahoo's reported plan to spinoff its stake in core Internet businesses represents defeat for CEO Marissa Mayer, who was tapped from Google in 2012 to revitalize the once-dominant search engine. The company's continued struggle suggests that Mayer has failed to find the right strategy to return the struggling Internet giant to growth.
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