Yahoo to consider sale of core internet business
Yahoo’s board is planning a series of meetings this week to consider selling off the company’s internet businesses and how to monetise its stake in Alibaba Group, the Wall Street Journal reports. The board is expected to discuss options in sessions beginning Wednesday and continuing through Friday, according to people familiar with the plans. They will consider whether to proceed with the planned spin-off of the stake in Alibaba, currently worth more than USD 30 billion, find a buyer for Yahoo’s web properties, or both, the report said.
Private equity firms are expected to be among those taking a look at Yahoo’s core business, which includes properties such as Yahoo Mail and Yahoo News. Together its sites are the third-most visited in the US, with 210 million visitors in October, according to ComScore. Investor Starboard Value last month called on the company to halt its Alibaba spin-off and instead find a buyer for its internet business. This followed the federal government’s decision not to rule on whether the Alibaba spin-off would incur billions of dollars in taxes.
Yahoo has a market capitalisation of around USD 31 billion. In addition to the Alibaba stake, its shares in Yahoo Japan (USD 8.5 billion) make up the bulk of this value. This leaves investors concerned that a sale of the Asian stakes could leave the company’s shares, with only the web properties, with little remaining value.
A separate report from Re/code downplayed the likelihood of the sale of Yahoo’s core business, saying the board meetings this week are an annual occurrence that will focus on a wide range of issues, including a report commissioned from McKinsey on whether Yahoo should sell some of its assets. The priority will be responding to Starboard’s comments and deciding whether to go ahead with the Alibaba spin-off, which is planned for early January. According to the report’s sources, Yahoo has already selected a CEO for Abaco Holdings, the spin-off company.
Speculation of the sale of the internet business has been driven by interest from a number of private equity companies, of which TPG is reportedly the most serious. However, none are very far with plans to buy all or part of Yahoo, the report said.