Yahoo to go ahead with Alibaba spinoff without IRS approval

“Neither this ongoing guidance project nor the IRS’s decision not to rule with respect to the Aabaco spinoff transaction changes the current law applicable to the proposed spinoff”, Yahoo said in a filing, referring to the corporate entity that will be spun off.


Yahoo shares are now gaining 3.77% in after hours trading after closing the day’s regular trading session at $27.60, down $1.53 or 5.25%.

This Web search & media company had earlier said that the IRS denied their request for private ruling on whether spinning off their stake in the Chinese ecommerce giant was going to be tax free or not.

REUTERS/Ruben SprichYahoo CEO Marissa MayerYahoo said on Monday that it will go forward with plans to spinoff its Alibaba shares into a separate company even if the IRS doesn’t provide a “favorable ruling” on the tax free transaction.

Yahoo shares sank at the time but were up almost four percent to $28.70 in after market trades on Monday.

As of Monday’s close, Yahoo’s shares have declined a little more than 45 percent this year.

Aabaco will wind up owning approximately 384 million shares of the Alibaba Group, representing an interest of about 15 percent, according to an SEC filing.

Investors have been following these plans of a spin off quite closely considering it a way for the company to unlock value.

Yahoo investors have long clamored for Yahoo to cash out its investment in Alibaba (and in Yahoo Japan) and give the proceeds back to shareholders.

Completion of the transaction is expected to occur in the fourth quarter of 2015, subject to the conditions described above.

The value of the Alibaba stake is now worth significantly less than when Mayer initially unveiled her spinoff plans.


Yahoo, expects this deal to be completed by December 31 has been trying to revive its advertising business by getting more users to its websites.

AFP  File  The Internal Revenue Service refused to promise that Yahoo's plan for spinning off its Alibaba holdings would sidestep US taxes