AAA Yahoo to spin-off $40bn Alibaba stake

Yahoo to spin-off $40bn Alibaba stake

Internet company Yahoo revealed plans yesterday to spin off its 15% stake in China-based e-commerce company Alibaba into a separate company.

US-based Yahoo paid $1bn in 2005 to acquire a 40% stake in Alibaba. It sold $9.5bn of shares in Alibaba’s initial public offering last year but still owns 384 million shares in the company, worth a total of about $40bn.

Yahoo intends to list the shares, together with an as yet undisclosed “legacy, ancillary Yahoo business” as an independent registered company called SpinCo. The move will enable it to avoid taxes it would otherwise be liable for through the ownership.

The deal will be pursued in the fourth quarter of 2015, once the one-year lock-up agreement concerning Yahoo’s shares in Alibaba expires.

Marissa Mayer, Yahoo’s chief executive, said: “Through share repurchases to date, we have returned approximately $9.7bn of proceeds from Alibaba. Post-spin, using the closing price for Alibaba as of January 26, we will have returned nearly $50bn of value to our shareholders.

“This level of capital return is historic, especially for a company of our size. The plan announced today vividly demonstrates our commitment to being good stewards of capital and increasing shareholder value.”

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