Yahoo has reversed its decision to spin off its huge stake in Chinese e-commerce giant Alibaba into a separate company and is instead considering selling its core business, according to CNBC.
Under pressure from investors, Yahoo had said in January that it would put its Alibaba shares into an independent company late this year. The maneuver was intended to minimize Yahoo’s tax bill from distributing its more than $20 billion Alibaba investment to shareholders.
But the proposed spinoff failed to get IRS approval. In early September, Yahoo revealed that the agency had declined to rule on the spinout’s tax free status, signaling that the government may be leaning against approving the strategy.
Soon after, Yahoo’s board said that the spinoff would move forward, even without the IRS’s blessing. But the uncertainty worried investors.
Last month, activist investor Starboard argued that the spinoff would bring too heavy of a tax burden. Instead, Starboard said the company should sell off its struggling Internet business, which includes its media properties, e-mail, and advertising businesses.
Tuesday’s news signals that Yahoo is taking the possibility seriously. Potential buyers include Verizon, InterActive Corp. and others.
Yahoo declined to comment.
Following the latest report, Yahoo’s shares (YHOO) rose 2.4% in after-hours trading to $35.70. Alibaba’s rose (BABA) .6% to $84.91.
Although the spinoff plans may be over, the company’s board was still standing behind CEO Marissa Mayer as of last week, according to a ReCode report. However, even if the Yahoo’s board decides Mayer must go, she’s still got a pretty hefty severance package.
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