Yahoo's Holders Await Next Moves -- WSJ
July 26 2016 - 3:04AM
Dow Jones News
By Dana Cimilluca
Yahoo Inc.'s agreement to sell its core business to Verizon
Communications Inc. marks the end of a long sales process, but for
shareholders it is just the beginning.
The $4.8 billion pact likely seals the fate of a business Yahoo
is synonymous with -- its pioneering Web portal and other related
operations -- but not the other parts of the company, which
together are much more valuable.
Even though Yahoo stock has gone sideways for a decade,
investors still value the company's pieces at about $37 billion.
Yahoo said it would become a publicly traded investment
company.
The investment company will hold Yahoo's 15% stake in Alibaba
Group Holding, currently valued at some $30 billion; its 35% stake
in Yahoo Japan, worth about $8.5 billion; other minority stakes
such as an investment in mobile-messaging firm Snapchat Inc.;
patents that will be left behind in the Verizon deal that are
already being auctioned; and some convertible notes. Between cash
Yahoo already had on its balance sheet and what it will take in
from the Verizon deal, the investment company should also have more
than $12 billion.
Yahoo said Monday that it intends to return that to shareholders
-- presumably through dividends or stock buybacks.
The Alibaba holding is the most valuable, and arguably the
trickiest to dispose of. Yahoo has made clear that it is eager for
any such disposal to be tax-free -- just as it hoped an earlier,
abortive plan to spin off the stake would be.
The company has more options when it comes to the Japan stake,
he said. It appears reconciled to paying some taxes should it be
sold -- say to SoftBank Group, which currently owns about 40% of
the Japanese company. SoftBank owns about 30% of Alibaba. How Yahoo
manages to cash in on the Asian stakes over time could have a
bigger impact on the company's value than the deal announced
Monday. That perhaps helps explain why Yahoo shares didn't move
much on the news.
--Dana Mattioli contributed to this article.
(END) Dow Jones Newswires
July 26, 2016 02:49 ET (06:49 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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