Too complex, thorny to take over Yahoo. That's what hedge funds are for, to execute difficult binary event transactions that produce, release incremental value. Here the incremental value is above $10-15 billion.
There are financial engineers and law firms that can do that. Goldman alluded to that in their pre-Spinco "neutral" rating, saying Spinco was worth $15 incremental per share, and remaining business about the same.
Baba is profitable today, and growing. Amazon, according to CNBC, is just turning towards profitability, might be sustainable profitable in 2016. So why is Amazon selling for $350 and BABA, with 50% higher quarterly earnings per share, selling under 90. Answer: traders, looking for volatility, short opportunities on any "bad" news, hide the EPS, look at revenue "miss" Baba worth more like 180 in 3 years, if Amazon valuation is any guide.
and sells at $325 while Baba earned .80 in qtr, sells for. 25% discount to Amazon, market irrationality will be arbitraged away this year.
Cash, cash equivalents, and marketable securities were $10 billion as of December 31, 2014 compared to $5 billion as of December 31, 2013, an increase of $5 billion.
So the 30% scenario won out, (actually it was 40% with a partial spinout) and if the lesser probabilities are in play, then the 10% buyout scenario may actually come to fruition before September. Because there is no way for CEO and Execs to lose, under any change of control scenario, everything vests, everybody walks away with a big lunch pail, ready for their next gig and a good rep among financial community.
Also, changing of the guard at FDA is going on. The new Asst Secty for Drugs and Tobacco, Dr. Califf, has spoken at orphan and rare disease drug conferences about the "valley of death" where clinical disease research goes, and what would happen if we accelerate development of therapies. Look at his keynote remarks
to rare disease meeting in 2012. FDA has felt pressure for patients and parents, and as all bureaucracies, wants to say, look, we're making changes, those mistakes in the past don't reflect our current practice or outlook.
2014 Active user growth 1 Pinterest 97% 2 Tumblr 95% 3 Insta 47% 4 LinkedIn 38% 5 YouTube 13% 6 Twitter 7% 7 Google+ 6% 8 FB -9%
Clues to what's next
MM went to Davos ( to keep appearance of normality and audition for next gig)
Goldman "neutral" but discusses 15 incremental value of tax efficient moves
But you have to allocate your basis in Yahoo among any spun-off companies
Typically, in the United States, shareholders in distribution-type spinoffs are taxed on gains or losses in the tax year in which they sell the shares. To calculate tax basis in the spinoff and parent, the shareholder must allocate his basis in the purchase of shares in the original company pro rata across the two resulting companies, based on the relative fair market values of the parent and spinoff immediately after the separation.
For example, suppose you buy one share of Company A at $100; A spins off Company B; and each share of A receives a distribution of 4 shares of B. Immediately after the spin, suppose the fair market value is $80 for A shares and $10 for B shares. The total market value of your holding is now $120 (one A at $80, and four B’s at $10). So your allocated basis in A would be 100*80/120, or $66.67; your basis in B would be 100*40/120, which is $33.33 for the four B shares, or $8.33 per B share.
The above paragraph evades the question of how to determine fair market value immediately after the spinoff. Turns out the IRS does not explicitly answer this question either. Your accountant can answer it, or you can refer to the investor relations pages of the parent and spinoff companies. The latter can be very helpful sources of information on this. They often offer specific fair market values for the two entities
But confirms why BARDA HHS should have a major stockpile of peramivir - new flu reassortments, no vaccine, just like H3N2v, antivirals are last resort if vaccines cannot stop spread, treatment for multiple cases will be needed. Should have hundreds of thousands of doses of IV antiviral in SNS. H5N1 H7N9 H3N2 H5N8
Focus on tax efficient monetization offers incremental value of $15 per share and mobile and ad growth in core business offer similar value (ie 30?). So Goldman is "neutral" cause they want to buy it themselves cheaply rather than have retail get in?
1. Give back 50% BABA proceeds as share buyback plus start regular 3-4% dividend. 50%
2. Reverse Morris Trust for all BabA, shares in TwoCo's going forward. 30%
3. Partial Baba spinout, retain 50%. 10%
4. Buyout by Baba, Softbank etc. 10%
CDCHAN 375 (Health Alert Network 375) recommended using one of 3 antivirals for anyone hospitalized (200,000) ot high risk
This CDC Health Update is being issued
to remind clinicians that influenza should be high on their list of possible diagnoses for ill patients, because influenza activity is elevated nationwide, and
to advise clinicians that all hospitalized patients and all high-risk patients (either hospitalized or outpatient) with suspected influenza should be treated as soon as possible with one of three available influenza antiviral medications. This should be done without waiting for confirmatory influenza testing. While antiviral drugs work best when given early, therapeutic benefit has been observed even when treatment is initiated later.