Summary: In an effort to avoid a tax bill of over $10 billion, Yahoo may sell off the Internet services the company is best known for.
Yahoo CEO Marissa Mayer has been receiving a lot of pressure from New York hedge fund Starboard Value to sell their Internet services so they can avoid a large tax bill and put their efforts into the booming Alibaba Group. There is no guarantee this effort will pay off, as the IRS will not make any promises that they would qualify for the tax exemption.
Yahoo currently has a 15 percent stake in Alibaba, an e-commerce company. The idea by Starboard is for Yahoo to sell their websites, ad services, data analytics, and mobile applications so they can go forward with a plan to spin off their Alibaba stake. The spinoff could protect them from capital-gains taxes on investments.
In response to Starboard’s idea, the Yahoo board has explored other options including wiping out over two-thirds of the gain on their Alibaba stake acquired for $1 billion ten years ago, which is now worth $33 billion. Starboard has threatened to retaliate against nine of the directors next year if they don’t follow their proposal.
If the board does decide to go along with Starboard’s proposal, Yahoo will be left as a shell company with some stake in Alibaba and Yahoo Japan. Bigger companies like AT&T may then be interested in acquiring the company, similar to Verizon’s acquisition of AOL earlier this year. Mayer has been leading Yahoo for over three years, but the company has yet to see any big profits.
Source: http://www.nytimes.com/aponline/2015/12/02/business/ap-us-yahoo-tax-dodge.html
Photo: slashgear.com