By Josh Beckerman
Yahoo Inc. filed a registration statement detailing its
previously announced plan to spin off its shares of Alibaba Group
Holding Ltd.
The name selected for the new public company is Aabaco Holdings
Inc., Yahoo said.
After the spinoff, Aabaco will own about 384 million Alibaba
shares, representing about a 15% stake in the Chinese
electric-commerce giant, and a 100% stake in a new entity that will
own Yahoo Small Business.
Yahoo Small Business is a division that sells tools to help
small-business owners market and sell their goods online.
Aabaco will operate as a closed-end fund. Its investment
objective "is to seek returns for its stockholders primarily
through owning the Alibaba shares," the filing said.
The fund plans to invest at least 80% of its total assets in
Alibaba shares under normal market conditions.
Alibaba's blockbuster IPO in 2014 provided about $6.3 billion in
cash for Yahoo, after taxes. Yahoo said in January that it would
spin off its remaining stake in Alibaba into a new company owned by
Yahoo shareholders. Yahoo expects the transaction to occur in the
fourth quarter, after its one-year lockup agreement with Alibaba
expires.
Tax treatment is a key question for the transaction, which Yahoo
is planning as a tax-free spinoff. Yahoo shares fell after a May 19
Bloomberg News report that said the Internal Revenue Service was
considering changes to its rules governing spinoffs. At the time, a
Yahoo spokeswoman said the company didn't expect that any IRS
changes would affect its previously filed ruling request.
In the filing Friday, the company said it is still awaiting a
ruling. Yahoo noted the risk that the agency may not issue a
favorable ruling, or that administrative guidance "could adversely
impact the tax-free treatment."
Write to Josh Beckerman at josh.beckerman@wsj.com
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