Yahoo Halts Alibaba Spinoff, Will Seek Sale of Internet Business (Report)

Marissa Mayer - H 2015
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Marissa Mayer - H 2015

There was uncertainty about whether Yahoo would be able to complete the $30 billion spinoff tax-free.

Yahoo has scrapped plans to spin off its $30 billion stake in Yahoo, according to a report from CNBC

During a series of annual meetings last week, the Yahoo board weighed whether to complete the spinoff, which would have seen the creation of a new company called Aabaco, or seek a sale for the company's core search and display advertising businesses. Per CNBC, Yahoo will now explore a sale of its core business as well as its Yahoo Japan stake, which could take a year or more. An official announcement could come as early as Wednesday.

A Yahoo spokeswoman did not immediately respond to a request for comment.

Yahoo CEO Marissa Mayer announced in January plans to spin the Alibaba shares into a separate business in a way that would not require the Sunnyvale, Calif.-based search giant to pay taxes on the shares. But uncertainty around whether the transaction could be completed tax-free prompted activist investor Starboard Value to urge the board to forgo the plans in favor of selling off Yahoo's core business.

The beleaguered company has faced mounting pressure from investors in recent months following the departure of several top executives. Yahoo posted weak third-quarter earnings in October, missing analyst expectations with $1.23 billion in revenue and earnings of 15 cents per share.

Yahoo shares, which closed up less than 1 percent to $34.84 on the Nasdaq, were trading up more than 2 percent during after-hours trading on the news.