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

Yahoo Inc is weighing a sale of its core business and will not sell its stake in Alibaba Group Holding Ltd, CNBC reported, a sharp reversal that came after pressure from an activist investor.
Yahoo Inc is weighing a sale of its core business and will not sell its stake in Alibaba Group Holding Ltd, CNBC reported, a sharp reversal that came after pressure from an activist investor.PHOTO: REUTERS

SAN FRANCISCO/BENGALURU (REUTERS) - Yahoo Inc is weighing a sale of its core business and will not sell its stake in Alibaba Group Holding Ltd, CNBC reported, a sharp reversal that came after pressure from an activist investor.

The moves, which CNBC said could be announced as soon as Wednesday (Dec 9), represent a stark rejection of chief executive officer Marissa Mayer's plans to sell the Alibaba stake and revive the Internet unit focusing on growing mobile, video and social media ads.

Yahoo could not immediately be reached for comment.

Yahoo's shares rose more than 2 per cent in after-hours trading. Alibaba's shares rose 1.3 per cent.

Yahoo's core business consists of its news sites, popular e-mail service and products like Tumblr and its advertising technology.

The CNBC report, which cited sources, did not disclose a possible price.

Analysts and bankers have estimated the unit could fetch between US$2 billion (S$2.8 billion) and US$8 billion, with many seeing US$4 billion as the likely price.

Private equity, media and Internet firms are potential buyers, they said.

The latest news came after a three-day meeting of its board of directors last week.

Yahoo faced pressure from activist investor Starboard Value LP to sell the core business rather than proceed with the planned spin-off of its US$30 billion stake in Alibaba, which could trigger large tax payments.

"This was really a really good PR move by Starboard as the spin-off was highly unlikely anyway given the tax implications and they knew they could claim victory once Yahoo made the official announcement," said Mr Jim Osman of The Edge Consulting Group, a research firm that advises activist hedge funds.

Yahoo's board met on Dec 4 on the third and final day of meetings to consider various options for the company, including selling its struggling Internet business.

The company's search and display ad businesses, which account for the lion's share of its total revenue, have been struggling and Ms Mayer's efforts to revive the businesses have yielded few results.