With Yahoo’s! core business currently being valued at less than zero, its board is expected to meet and debate about the future of the company – including a possible sale.
It has also been suggested that concerns around CEO Marissa Mayer’s lack of progress turning around Yahoo! has increased pressure on the board to consider her future as well.
At the forefront of the expected meeting lies the discussion of whether Yahoo! would spin-off its investment in Alibaba, currently worth more than $30bn. Mayer has been facing increasing pressure from investors to liquidate the company’s Asian assets and return the proceeds to shareholders.
The company said: “Yahoo! believes this transaction will achieve the most advantageous return of capital to shareholders with the absolute highest probability of success.”
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As such, Yahoo! sought the IRS’s blessing in the form of a private-letter ruling, which would give investors assurance that a spin-off could be completed. However, the IRS declined to respond. This was followed by the IRS issuing a guidance, whereby it expressed its concerns of spin-offs that consist of investment assets and minimal operating businesses.
Activist investor Starboard Value LP last month called on the company to halt its plans for Alibaba and instead find a buyer for its Internet business. In a letter to Yahoo!, Starboard said its position changed following the federal government’s decision not to rule on whether the spin-off would incur taxes.
Starboard said the risk of the deal was too great.
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