Yahoo will not spin off Alibaba stake, weighs core business sale: CNBC

Tue Dec 8, 2015 10:07pm EST
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SAN FRANCISCO/BENGALURU (Reuters) - Yahoo Inc YHOO.O is weighing a sale of its core Internet business and will not sell its stake in Chinese e-commerce firm Alibaba Group Holding Ltd (BABA.N: Quote), CNBC reported, with an announcement coming as soon Wednesday.

The moves represent a stark rejection of Chief Executive Officer Marissa Mayer's plan to sell the $30 billion Alibaba stake and to revive Yahoo's core Internet unit focusing on growing mobile, video and social media ads.

Yahoo could not immediately be reached for comment. Its shares rose more than 2 percent in after-hours trading. Alibaba's shares rose 1.3 percent.

Yahoo's core business consists of selling search and display ads on its popular news and sports sites, email service and products like Tumblr.

Yahoo is also considering what to do with its stake in Yahoo Japan (4689.T: Quote), according to the CNBC report. Yahoo owns 35 percent of that company, worth about $8.5 billion at current exchange rates.

The CNBC report on Tuesday, which cited unnamed sources, did not disclose a possible sale price for the core Internet unit. Analysts and bankers have estimated it could fetch between $2 billion and $8 billion, with many seeing $4 billion as the likely price, but some regard its value as less than zero.

The CNBC report indicated the sale process could take a year or more. But one analyst, Robert Peck with SunTrust, said he expected the company to expedite the process. Three to six months is reasonable, he said, "depending on who acquires it."

After such a sale, all that would be left, essentially, would be the Alibaba and Yahoo Japan stakes.

“This is absolutely a step in the right direction," said Neil Doshi, an analyst at Mizuho Securities USA. "We’d much rather see Yahoo either spin off or potentially sell the core and have a tax liability on a smaller piece than have it on the larger Alibaba piece.”   Continued...

A Yahoo logo is pictured in front of a building in Rolle, 30 km (19 miles) east of Geneva, in this file picture taken December 12, 2012.    REUTERS/Denis Balibouse