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Yahoo! Inc. (YHOO) Message Board

  • thetoadtimes thetoadtimes Sep 20, 2011 9:16 AM Flag

    Yahoo to Spin-Off Alibaba Group

    Eric Jackson said it would be a mistake for Yahoo to sell off their entire Alibaba stake. “It’s going to go through some huge growth,” he commented. Read more about potential bidders taking a look at Yahoo.

    Tracking stocks certainly can be problematic in and of themselves, because there still remains one legal corporate entity, one CEO and conflicts among the different shareholder groups as to the allocation of resources in a company.

    But since Yahoo’s core operations have nothing to do with Alibaba, a tracking stock for those assets might work as a way to assign the real value to the assets that many investors believe are propping up Yahoo’s shares.

    Another potential problem with this idea is that Alibaba is private, and its financials are mostly undisclosed. Investors would need this sort of data to evaluate such a tracking stock. Yahoo would have to disclose Alibaba’s financials to U.S. regulators as well as investors.

    “Yahoo could do this and Alibaba Group wouldn’t be able to stop them,” Eric Jackson said. “It is completely within Yahoo’s current set of rights. However, Alibaba doesn’t want to release their full financials, because this lowers their bargaining power in trying to buy back part of their 40% stake that Yahoo controls before Alibaba Group decides to IPO.”

    Even Jackson agrees that with all the deal chatter, this scenario is not likely to happen, unless one of the companies looking at Yahoo is Liberty Media itself. With Greg Maffei, former chief financial officer of both Microsoft and Oracle as Liberty’s current chief executive, it’s not completely out of the realm of possibility.

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