Yahoo announced in its Q4 earnings that it’s going to spin-off its remaining stake in Alibaba into a public independent investment company called SpinCo.
After the tax-free spin-off, SpinCo will own Yahoo’s remaining 384 million Alibaba shares (~$US40 billion value). Yahoo’s rationale for the spin-off is to maximise its return of capital to shareholders and minimize taxes on the sale.
Yahoo’s stock is up nearly 7% after-hours.
“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,” CEO Marissa Mayer said in the company’s earnings report. “A tax-free spin off accomplishes this and delivers value directly and exclusively to our shareholders. Through share repurchases to date, we have returned approximately $US9.7 billion of proceeds from Alibaba. Post-spin, using the closing price for Alibaba as of January 26, we will have returned nearly $US50 billion dollars of value to our shareholders.”
Here are some slide’s from Yahoo about the spin-off: