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Yahoo scraps Alibaba spin off plan

Wednesday, December 09, 2015 - 01:13

Yahoo is now considering transferring its core internet business into a separate company. One analyst thinks it'll likely sell that core unit. Fred Katayama reports.

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Abrupt about face at Yahoo. The Internet company is scrapping its plan to spin off its huge stake in Alibaba. It caved to pressure from activist investor Starboard Value, which argued that a sale of the stake in the Chinese e-commerce giant could incur huge taxes. The IRS had earlier denied Yahoo's request for a ruling on whether a spinoff would be tax free. Yahoo chairman Maynard Webb said, "Among other factors, we were concerned about the market's perception of tax risk..." The stake in Alibaba makes up the bulk of the company's market value. Yahoo now says it'll consider transferring the assets outside of the Alibaba stake into a new company. That core business includes its popular sites like finance and sports and its email service. The move would produce two separate publicly traded companies. SunTrust Robinson Humphrey analyst Robert Peck thinks Yahoo's most likely future option is to sell the core business. He called Yahoo's latest move a "positive defining moment," saying, "We applaud the board for looking to optimize company structure, minimize risk, and maximize shareholder value." So did investors, sending the shares higher in early trading.

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Yahoo scraps Alibaba spin off plan

Wednesday, December 09, 2015 - 01:13