The plan will place Yahoo’s 15% stake in Alibaba – which has recently been the technology company’s most successful moneymaker – into a secondary new firm called SpinCo, Yahoo said in a statement Tuesday.
“I am proud and happy to announce a plan for a tax-free spin-off of our Alibaba holdings,” Yahoo CEO and president Marissa Mayer said. “Throughout my tenure with the company, we have worked tirelessly on a tax-efficient alternative that would maximise the value of our Alibaba investment for our shareholders. A tax-free spin-off accomplishes this and delivers value directly and exclusively to our shareholders.”
Yahoo’s chief financial officer, Ken Goldman, said the company has spent years trying to work out how to return capital from the Alibaba stake to shareholders without being handed a major tax bill.
“We have actively engaged experts in tax-efficient structures over the past two years and have considered a variety of alternatives. We remain aligned with our shareholders and our plan is designed to achieve the most advantageous return of capital to Yahoo shareholders with the absolute highest probability of success,” he said. “The structure provides the investment community with clear visibility into the respective entities’ fundamentals, and also facilitates valuation transparency in SpinCo because Yahoo’s stake in Alibaba will constitute almost all of its value.”
The new entity, which will be created within the next three months and listed publicly, will include Yahoo’s 384m shares in Alibaba as well as an unspecified “legacy, ancillary” Yahoo business.
Yahoo shares rose by 10% in extended trading. The stock had declined by 2.9% to $48 at the close in New York.
“It’s all about Alibaba,” Brian Wieser, an analyst at Pivotal Research Group, told Bloomberg. “It’s all that investors have been focused on.”
Yahoo also reported its fourth quarter results, with sales, excluding revenue shared with partner websites, falling 1.8% to $1.18bn.
This article was written by Rupert Neate in New York, for theguardian.com on Tuesday 27th January 2015 22.58 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010