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Yahoo Has Scrapped Its Plan to Spin Off Its Alibaba Stake

December 9, 2015, 12:35 PM UTC

Yahoo has scrapped a plan to spin off its stake in Alibaba Group Holding, citing tax concerns.

Yahoo’s (YHOO) assets and liabilities other than the Alibaba stake will be transferred to a new company, resulting in two separate publicly traded entities, Yahoo said on Wednesday.

The stock of the new company will be distributed pro-rata to Yahoo shareholders.

Yahoo, which has a market capitalization of about $35 billion, owes most of its valuation to its stakes in Alibaba and Yahoo Japan.

The Alibaba stake alone is worth more than $30 billion.

Yahoo shares were up about 2% in premarket trading.

“In addition to our efforts to increase value and diminish uncertainty for investors, the ultimate separation of our Alibaba stake will be important to our continued business transformation,” Yahoo CEO Marissa Mayer said in a statement.

The company also lost board member Max Levchin. In a filing with the Securities and Exchange Commission Wednesday, Yahoo said Levchin, a cofounder of PayPal and Slide, resigned Dec. 4 “due to his other professional commitments and demands on his time, and not due to any disagreement with Yahoo on any matter related to Yahoo’s operations, policies or practices.”