Yahoo to Reduce Asian Stakes, Raise Cash

yahoo stock priceEarlier reports of Yahoo (NASDAQ:YHOO) looking at a series of deals to sell off its Asian assets are looking like they have legs.  Reports from Tuesday point towards a plan to reduce their stake in Chinese company Alibaba Group to 15% from it’s current 40% ownership stake.  It is also is looking to sell its 35% stake in Yahoo Japan, of which Japanese internet firm Softbank holds a large share.

The plan is a complicated one that would spin off a separate company under Yahoo’s control which would be flush with cash from Alibaba and Alibaba would have its shares returned to them.  A version of this plan has been in the wings for months but Yahoo put it off in the hopes that private equity firms would be willing to put in some competitive bids which did not materialize.  Silver Lake had be reported to be in the mix but that no longer seems to be the case.

The way the deal is structured it is not considered a sale under U.S. tax law and therefore does not carry any tax burden associated with the move.  Yahoo would do the same deal for its 35% stake in Yahoo Japan.  That stake is worth around $6 billion.  The two deals together look to raise for Yahoo around $14 billion which can be used to re-focus the company on its core business while it continues to search for a new CEO.

The market loved the news as Yahoo’s stock jumped 6% on the report to close at $15.99 per share.

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Tom Luongo

About Tom Luongo

Tom Luongo is a professional chemist and self-taught economist who has been following and trading stocks for nearly 12 years. He has no formal ties to the financial industry and considers that an asset in his analysis of the interplay between monetary policy and capital markets.

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