Activist investor renews call for Yahoo to sell core business

Thu Dec 3, 2015 3:32pm EST
 
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SAN FRANCISCO/BENGALURU (Reuters) - An activist investor on Thursday renewed its push for Yahoo Inc (YHOO.O: Quote) to abandon its plans to spin off its valuable stake in Chinese e-commerce giant Alibaba Group Holding Ltd (BABA.N: Quote) and instead sell its core business "at the highest price possible."

The pressure from Starboard Value LP came as Yahoo's board, in a three-day meeting that started on Wednesday, was reportedly weighing a number of options for the troubled company.

That includes selling the core business, a source told Reuters, encompassing features like Mail, its news site and other Web services.

Alibaba, seen by some as a potential buyer, is unlikely to be interested, according to the Wall Street Journal. Citing a person familiar with the matter, the Journal said Alibaba felt the core business is not attractive, "given the difficulties successive managers have had in turning it around." (on.wsj.com/1jAjb0T)

Yahoo's board, which includes co-founder David Filo, Wal-Mart Stores Inc (WMT.N: Quote) former Chief Executive H. Lee Scott Jr. and Charles Schwab Corp SCHW.N Chairman Charles R. Schwab, was also expected to discuss the planned spinoff of Yahoo's 15 percent stake in Alibaba.

Alibaba will be interested in buying back its shares from Yahoo only at a steep discount, the WSJ said, citing the person.

After earlier urging the company to spin off the Alibaba stake, Starboard reversed course. It had first urged the sale of the core business in a November letter to Yahoo.

It is unclear what the board's decision will mean for the future of Yahoo Chief Executive Marissa Mayer, who has pushed for the spin-off of the Alibaba stake but has not publicly commented on the possible sale of the core business.

Yahoo shareholders could end up paying billions in taxes if the U.S. Internal Revenue Service deems a spin-off taxable. The company had sought a private letter ruling from the IRS to confirm a spin-off would be tax-free, but the agency denied the request in September.   Continued...

 
The logo of Alibaba Group is seen inside the company's headquarters in Hangzhou, Zhejiang province early November 11, 2014. REUTERS/Aly Song