By Douglas MacMillan And Lauren Pollock
Yahoo Inc. unveiled plans for a tax-free spinoff of its
remaining stake in Chinese e-commerce giant Alibaba Group Holding
Ltd., heeding calls from some shareholders and activist Starboard
Value LP.
Shares rose more than 7% in after-hours trading.
Investors have been eager to hear Yahoo's plans to extract value
from its lucrative Asian assets while avoiding a tax bill of
billions of dollars. The company sold shares in Alibaba's initial
public offering but still owned a 15% stake of the Chinese
e-commerce giant.
The new company Yahoo unveiled Tuesday will own all of Yahoo's
remaining shares of Alibaba, which are valued at $40 billion, and
will assume no debt in the deal.
Yahoo, meanwhile, will hold on to its core business and its
35.5% interest in Yahoo Japan, which is worth about $2.3
billion.
Together, the Alibaba and Yahoo Japan stakes make up the vast
majority of Yahoo's current market capitalization of about $46
billion.
The spinoff plans came as the Internet company also reported
declines in fourth-quarter earnings and revenue.
Tuesday's plans could help determine whether embattled Chief
Executive Marissa Mayer buys herself more time with shareholders or
invites a bitter proxy battle that could threaten her job.
Starboard had pressured Yahoo to minimize those taxes, calling
for the company to essentially break itself into two distinct
parts, one for its core business of Internet properties and the
other for its holdings in Alibaba and Yahoo Japan.
Write to Douglas MacMillan at douglas.macmillan@wsj.com and
Lauren Pollock at lauren.pollock@wsj.com
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