Yahoo announced it will spin off its large stake in Chinese ecommerce firm Alibaba tax-free into a newly formed independent registered investment company (“SpinCo”). The stock of the new company will be distributed pro rata to Yahoo shareholders.
According to the Wall Street Journal, “Once completed, the spinoff would let Yahoo shareholders cash out of Alibaba stock on their own, and also give the Chinese e-commerce giant the chance to buy the entire entity and thereby its own shares at a lower tax rate than if it tried to acquire them now.”
Yahoo said it would continue to operate its core business and hold its 35.5% interest in Yahoo Japan.
Interestingly Wall Street analyst Bob Peck of Sun Trust noted that during Yahoo’s fourth-quarter earnings call, Yahoo CFO Ken Goldman stated that the company remains “open minded” on ways to unlock value in Yahoo Japan.
If Yahoo were to similarly spin off its stake in Yahoo Japan, it could give ecommerce giants such as Alibaba, Rakuten, or Amazon an opportunity to acquire a stake in the company that operates Yahoo Auctions, one of the biggest marketplaces in that country.
Longtime readers may remember that while eBay beat back Yahoo Auctions around the world, the one region it lost was Japan, where Yahoo Auctions trounced eBay and remains a major ecommerce force in that country.
In fact, EcommerceBytes recently noted that some online sellers were proposing that Yahoo consider extending its auction platform to the U.S. in light of the pending breakup of eBay and PayPal next year.