Yahoo has reportedly abandoned its plans to spin off its $32bn stake in Chinese e-commerce group Alibaba, fuelling speculation that it may sell off its internet business.
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In recent weeks, activist investor Starboard Value has been pushing for Yahoo to abandon its Alibaba plan and sell its core business.
The internet firm is expected to announce that it will not place its 15% Alibaba holding in a separate company, but focus instead on its core business, according to CNBC.
However, this could include selling off most of Yahoo, and Verizon Communications chief Lowell McAdam expressed interest in acquiring Yahoo’s assets if they are put up for sale, reports the Telegraph.
McAdam has reportedly said Yahoo’s assets would fit together well with AOL, the internet firm recently acquired by Verizon, but emphasised that no deal is under discussion yet.
Verizon’s chief financial officer (CFO) Fran Shammo has also indicated that Verizon is open to the idea of acquiring Yahoo, according to Slash Gear.
“If we see there is a strategic fit and it makes sense for our shareholders and we can return value, we’ll look at it. But at this point it’s way too premature to talk about. All I can say is we don’t know what Yahoo’s board will decide. It’s too early to know,” Shammo is quoted as saying.
The decision not to spin off the Alibaba stake is seen as potentially bad news for Yahoo’s chief Marissa Mayer, who is under pressure because she has so far failed to turn the business around.
Analysts said the decision, reached after extensive deliberations by the company’s board over the past week, is a repudiation of the strategy laid out by Mayer.
The spin-off was seen as a way generate a lot of money for Yahoo and its shareholders, but the move is believed to have been called off because of concerns that it would incur a tax bill of $10bn.
The risk of a huge capital gains cost increased after the US revenue service refused to affirm in advance that the spin-off would be tax-free.
Read more about Yahoo
- Yahoo announces it will close its research and development centre in China in plans to consolidate research and cut costs.
- Yahoo has acquired Snapchat rival Blink, but will shut down the app to use its developers to boost Yahoo’s mobile presence.
- Yahoo is set to buy digital video advertising service BrightRoll to augment its video ad platform in a deal worth $640m.
- Yahoo has acquired app analytics firm Flurry to boost mobile advertising revenues.
Yahoo has been in decline since its advertising business was eclipsed by rivals Google and Facebook, and despite a string of strategic acquisitions, Mayer is yet to deliver on her turnaround mission.
In the three years since taking over as chief executive, she has focused on improving the company’s mobile services.
However, the company’s revenue is reportedly at the same level as when she arrived and many of her initiatives, including original video programming, digital magazines and silent video-messaging app Livetext, have yielded disappointing results.
Mayer is the latest of seven CEOs or acting CEOs at the beleaguered company in the past 10 years.
The about-turn on selling off the Alibaba stake has prompted speculation that Mayer’s time may be up. While the board has not publicly turned against Mayer, and she has stacked the nine-member board with allies, CNN Money reports that she will collect $26m in severance if she’s fired or $110m if Yahoo gets sold, and points out that she is due to give birth to twins in December 2015.