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Yahoo officially files to spin off Alibaba stake

July 17, 2015, 11:53 PM UTC
Yahoo NewFront 2015 Marissa Mayer
CEO Marissa Mayer at Yahoo's 2015 NewFront.
Courtesy: Yahoo

Yahoo’s spin-off of its huge stake in Alibaba is one step closer to reality.

Yahoo plans to put its shares in the Chinese e-commerce giant into an independent public company that will be called Aabaco Holdings, according to a regulatory document Yahoo filed late Friday. The new company will own Yahoo’s nearly 384 million shares of Alibaba stock, or about 15% of the overall number.

Aabaco Holdings will be a sizable company, at least in terms of value. Yahoo’s stake, one of the few bright spots in its portfolio, is currently worth more than $32 billion.

Yahoo CEO Marissa Mayer announced the split in January, after pressure from investors. The split is expected to be completed in the fourth quarter of 2015, Yahoo said in a statement. Once complete, Yahoo as a company won’t own any of the shares, which will instead be distributed among Yahoo stockholders.

Yahoo’s maneuver is expected to reduce its tax bill when it sells the shares. But the company warned in its filing that it’s awaiting a final confirmation from the IRS on the matter.

Following the announcement, Yahoo’s stock (YHOO) was 0.9% in after-hours trading, at just above $40 per share.

The spin off includes Yahoo Small Business, a sort of stepchild for the Web portal that sells tools to help small businesses market and sell their goods online. Yahoo had to include it in the new entity for legal reasons.