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Yahoo to spin off stake in Alibaba, after shareholder push

Yahoo Inc has announced its plan to spin off its 15% stake in
China’s Alibaba Group Holding Ltd, responding to pressure to hand over to
shareholders its prized e-commerce investment valued at roughly $40 billion,
reports
Live
Mint
.

Yahoo Inc has announced its plan to spin off its 15% stake in
China’s Alibaba Group Holding Ltd, responding to pressure to hand over to
shareholders its prized e-commerce investment valued at roughly $40 billion,
reports
Live
Mint
.

Yahoo CEO Marissa Mayer decided
on the spinoff after Starboard Value LP and
other investors pushed her to return cash to shareholders, find ways to cut
taxes and avoid major acquisitions.

Yahoo said in the statement, the
spinoff, which will include a “legacy, ancillary Yahoo business,” will be
completed in the fourth quarter, after the expiration of Yahoo’s one-year
lockup agreement on the Alibaba shares. Yahoo didn’t specify what the business will
be and said the spinoff would be subject to regulatory approval.

Shareholders are reportedly in
favor of Yahoo’s tax-free plan to distribute its $40 billion holding in the
Chinese e-commerce company as a separate public firm.

But, according to the report,
post the spin off all eyes will turn to chief executive officer Marissa Mayer as
she attempts to revive growth of the company from other assets.

While Mayer has made
acquisitions, restructured the company and taken steps to boost the appeal of
Yahoo’s products, she will now have to start delivering tangible results.
According to industry analysts, Mayer will need to extract more revenue from
new businesses, including mobile and video, while making sure that Yahoo
benefits from demand for search services.

Mayer was reported in Live Mint
as saying that Yahoo’s main business of selling advertising to Web users is
recovering, with display-ad sales on track to climb this year.

As the Yahoo CEO Mayer has been
investing in products, partnerships and ad services to expand Yahoo’s reach and
restore growth, including on mobile devices where users increasingly access
digital content. Mobile revenue for the fourth quarter was $253.8 million,
Yahoo said. Mobile is part of what Mayer called mavens, or newly emerging
businesses at Yahoo that also include video and social.

“The core of Yahoo’s business is
returning to health and stability,” Mayer was quoted in Live Mint as saying.

The shares of Yahoo climbed as
much as 10% in extended trading after the spinoff was announced. The stock,
which declined 2.9% to $47.99 at the close in New York, rose 25% in 2014.

The service’s prospects improved
in November after Yahoo struck a deal to replace Google Inc. as the default
search engine on Firefox browsers in the US Mayer also said she’s open to new
deals, including with Apple Inc. 

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