Dive Brief:
- Yahoo says it will not pursue a plan to spin off its stake in Alibaba Group Holding Ltd after all, according to the Wall Street Journal
- Yahoo’s board will instead focus on a new plan to spin off Yahoo’s core business and its stake in Yahoo Japan into a separate, publicly traded company.
- Experts say the shift in strategy could save shareholders billions of dollars in taxes but would likely take more than a year to complete.
Dive Insight:
Yahoo Chairman Maynard Webb said that there isn’t a proactive movement to sell the company, but that the “board has a fiduciary obligation to engage with any person who comes forward with a good offer.”
Last month, Starboard Value's Managing Member Jeffrey C. Smith said that Yahoo should be exploring a sale of its core business of search and display advertising rather than selling its shares in Alibaba.
The Alibaba stake dates back to 2005, when Yahoo paid $1 billion for 40% of the company.
Smith said Yahoo is the only "Silicon Valley company we know that currently has a stock price almost entirely driven by the value of an entity outside of its control," referring to the company’s stake in Alibaba.
CEO Marissa Mayer defended her progress turning around Yahoo.
“I remain convinced that Yahoo is on a better path and the right one,” Mayer said.
Yahoo's revenue grew 6.8% in the third quarter, but profits dropped to $76 million. The company also saw several key staff members leave. On Friday, PayPal Inc. co-founder Max Levchin told Yahoo he was resigning from the board effective immediately. Levchin was the first person Mayer named to Yahoo Inc.’s board after she took over as chief executive.
