Yahoo shares rise as board meets and considers sale of Web business

Wed Dec 2, 2015 4:28pm EST
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By Anya George Tharakan and Liana B. Baker

(Reuters) - Plans by Yahoo Inc's (YHOO.O: Quote) board to consider selling its struggling Internet business sent the company's shares up more than 5 percent on Wednesday, as investors cheered a potential new way to separate Yahoo's traditional services from its valuable investment in Chinese Web merchant Alibaba.

Yahoo's board will weigh a sale of the Internet business at a three-day board meeting starting on Wednesday, a source familiar with the matter told Reuters on Tuesday.

Chief Executive Marissa Mayer's attempts to revive the traditional business have born little fruit, and almost all of Yahoo's market capitalization of about $34 billion is ascribed to its stakes in Chinese e-commerce company Alibaba Holding Group Ltd (BABA.N: Quote) and Yahoo Japan Corp (4689.T: Quote).

A separate Alibaba stake would be expected to be more highly valued by the market, but investors want to avoid a massive tax bill in the process. Selling the traditional business is seen as one way possibly to achieve that.

Broken out as a separate company, Yahoo's email, Yahoo and Tumblr web sites and mobile services could fetch between $2 billion and $8 billion, analysts and bankers said, many seeing $4 billion as the likely price.

If Yahoo sells off its traditional web business all that would be left, essentially, is the Alibaba and Yahoo Japan stakes.

"Realizing value is far from assured, however," Pivotal analyst Brian Wieser wrote in a note. "The big question is whether anyone would actually show up with a meaningful bid."

Interested bidders could range from private equity companies aiming to refocus Yahoo to technology companies eager for Yahoo's mobile and web content, following the model of Verizon Communications Inc (VZ.N: Quote) buying AOL.   Continued...

Marissa Mayer, President and CEO of Yahoo, participates in a panel discussion at the 2015 Fortune Global Forum in San Francisco, California November 3, 2015. REUTERS/Elijah Nouvelage