Yahoo Spins Off $40B Alibaba Stake Into Unit Called SpinCo
The spin-off strategy could save $16 billion in taxes on the $40 billion stake.Yahoo had one other major assignment in its Jan. 27 fourth-quarter earnings report, besides revealing its actual earnings. Investors clearly wanted to see the company's plan for a tax-free spin-off of its shares in Alibaba. They got it, and voila: Yahoo climbed more than 7 percent to $51.49 in after-hours trading. Yahoo, which once owned nearly 30 percent of the China-based e-commerce site that went public last year, said it would transfer its remaining 15 percent stake—384 million shares worth about $40 billion, plus what it called "legacy, ancillary businesses"—into a new unit dubbed SpinCo. Shares of the new unit will be distributed to current Yahoo shareholders. Yahoo made a pretty good move back in 2005 when it bought the original Alibaba shares for about $1 billion.
"We believe it maximizes value for our shareholders and optimizes transaction efficiency and certainty," CEO Marissa Mayer said on the conference call to analysts. "This is a structure that we can pursue and affect independently, capturing value exclusively for our shareholders."