Yahoo In Talks To Dump Yahoo Japan

Yahoo is in advanced talks to dump its share of the joint venture in Yahoo Japan, Reuters reports:

A deal to transfer Yahoo’s 35 per cent stake in Yahoo Japan to telecommunications company and investor SoftBank could come within a few weeks, people with knowledge of the discussions said. The public value of the stake is just under $7.5 billion.

A straightforward sale is unlikely for tax reasons and the parties are exploring other structures, these people said. A deal has not yet been reached and could yet fall apart.

When asked for comment, a SoftBank spokesman said there was “no truth” to claims that Yahoo was planning to sell its stake back to SoftBank, but declined to comment on discussions.

Yahoo wants to avoid taking a huge tax hit on the sale, so it is exploring two alternatives: An asset swap, in which SoftBank takes Yahoo stock in exchange for the Yahoo Japan stock, and a “tracking stock,” in which Yahoo shareholders can be free to sell off the Yahoo Japan stock without a triggering a tax event for the company.

Reuters thinks this move is a prelude to Yahoo exiting its 40% stake in China’s Alibaba, which many investors are clamoring for it to do.  SoftBank also owns a stake in Alibaba, so the three-way entanglement is reportedly complicating matters.

Divesting “non-core” assets like this is likely a good way for Yahoo to regain the focus it needs to turn around its core media business.

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