Yahoo Suspends Spin Off Of Remaining Stake In Alibaba Group

(RTTNews) - Internet giant Yahoo! Inc. (YHOO) Wednesday said its board has unanimously decided to suspend the spin off the its remaining stake in Alibaba Group Holding Limited (BABA). In order to best drive long term value of shareholders, the Board will now evaluate alternative transaction structures to separate the Alibaba stake.

Yahoo's original plan was to spin off all of its remaining holdings in Alibaba into a newly formed independent registered investment company - Aabaco Holdings, Inc. In September, 2015, U.S. Internal Revenue Services has declined to grant advance approval for the tax-free spin-off.

The company said it is thinking of a reverse spin off of its assets and liabilities other than transferring the Alibaba stake to a newly formed company. The current plan is to distribute the stock on a pro-rata basis to Yahoo shareholders resulting in two separate publicly-traded companies and thus the shareholder benefits also will be realized.

According to Yahoo, revere spin off is thought to be a complex transaction and it requires third party consents, audited financial statements, shareholder approval, and SEC filings and clearance. The process can take a year or more to conclude.

Maynard Webb, Chairman said, "We believe that the previously announced spin off would be tax free to Yahoo and its shareholders... However, in consideration of developments since the original spin off plan was announced and after significant deliberations, we are suspending work on the Aabaco spin off."

He added that Yahoo is concerned about the market's perception of tax risk, which would have impaired the value of Aabaco stock until resolved.

Looking ahead, Marissa Mayer, CEO of Yahoo said, "In 2016, we will tighten our focus and prioritize investments to drive profitability and long-term growth. A separation from our Alibaba stake, via the reverse spin, will provide more transparency into the value of Yahoo's business."

Earlier in Mid November, Yahoo's significant shareholder Starboard Value LP has said that the proposed spin-off of Aabaco Holdings is not its best alternative.