After a three day board of directors meet by Yahoo, as against the plans of its Chief Executive Officer Marissa Mayer to sell away their stake of $30 billion in Alibaba Group Holdings to restore Yahoo’s core business of Internet, an announcement came which said that the company is planning to sell off its core Internet business consisting of selling search, email service and ads on its sites and not selling its stake in Alibaba, as reported by CNBC.
The report also indicated that yahoo is working on its Yahoo Japan stake, $8.5 billion which is about 35% of the total value. This announcement made yahoo’s shares rose by about 2% and Alibaba’s by 1.3%
According to analysts this sale could fetch anywhere between $2 and $8 billion, though the CNBC report didn’t indicate any price. But the report said that it may take possibly a year or more for the sale to happen though few analysts felt that one year is too long a period and it will depend on the buying party which may be other internet firms or private equity firms. Verizon Communications may look at buying the core business of yahoo as mentioned by the CFO of Verizon.
Neil Doshi, an analyst at Mizuho Securities USA commented “This is absolutely a step in the right direction. We’d much rather see Yahoo either spin off or potentially sell the core and have a tax liability on a smaller piece than have it on the larger Alibaba piece.” The same was expressed by Starboard Value LP which is the active investor in Yahoo which has put a pressure on Yahoo to take such a decision.
Previously in January, Yahoo CEO Mayer made an announcement of selling Alibaba stakes thinking that the deal would be tax free which was declined by U.S. Internal Revenue Service, which would have been a $12 billion burden on the shareholders.
Jim Osman of the The Edge Consulting Group commented in the same direction that of Neil Doshi, expressing that the action taken by Starborad is absolutely the right move. He quoted, "This was really a really good PR move by Starboard as the spinoff was highly unlikely anyway given the tax implications and they knew they could claim victory once Yahoo made the official announcement”.
Though this decision of Yahoo was not of Mayer’s interest few analysts feel that this is not a defeat for her as she can either sell the core business and exit or she can strike a deal new company which is going to take over Yahoo and continue to be part of it. Either way she is going to be benefitted.
