Jordan Rohan of Stifel has said that Alibaba might trade up to $120 billion in the months following its IPO. That would mean Yahoo!’s final 12% stake – which it isn’t under any obligation to sell – would be worth another $14.4 billion. And if Yahoo! chose to dispose of that stake via a cash-rich split down the road, could bring in another $9.6 billion in cash and $4.8 billion in M&A at the $120 billion valuation.
So, in the triple cash-rich split scenario, that would leave Yahoo! with $25.6 billion in cash, $11 billion in M&A through “other assets” they’ve received back from Alibaba and YJ, and its existing “core business” with Tumblr.
What’s that “core business” worth? It’s not zero. Maybe it’s 4x EBITDA, which would be a discount to what AOL trades at. That suggests it’s worth another $6 billion.
You add it together and you have $42.6 billion in cash and assets. With the current number of shares outstanding, that gives you a per share value for Yahoo! of over $41.
I am surprised that Yahoo is still in business. I use Yahoo mail and since it forced me to upgrade to their new mail format, Yahoo delivers my emails to the send folder and junk folder. I am transitioning to Outlook and Microsoft Office Outlook.
The worst is that Yahoo does not have an easy way to contact customer service or tech support. I guess they fear they will get inundated with calls and complaints. Great strategy!
The asset-swap strategy would let Yahoo shed its stakes without paying capital gains taxes in the U.S. Alibaba and Softbank would each create a subsidiary into which they would put several billion dollars of cash and operating assets. The two Asian companies would then swap the so- called splitcos for the Alibaba and Yahoo Japan stakes, while Yahoo would keep its U.S. business and all of its cash.