Rumours are flying around, with many quoting anonymous sources claiming that Yahoo could be considering selling its stake in China’s Alibaba and its Japanese affiliate in order to stay afloat in the United States and maybe avoid seeking a sale to private equity firms.
The company owns 40 percent in Alibaba since 2005, and owns 35 percent in Yahoo Japan. Alibaba is China’s largest e-commerce site, while its Japanese portal is the number one site in Japan, according to Alexa. Both assets together are worth, according to the New York Times, about $17 billion.
That is huge, and for Yahoo – desperate to stay relevant in an era of Facebook and Twitter – a great way to get some much needed cash. And also a smart move – considering that they paid $1 billion in 2005 for the Alibaba stake.
The New York Times also notes that Yahoo plans to keep a 15 percent stake in the Chinese company, and are also trying to push for a tax-free sale (obviously, it does not want to lose any of the potential $17 billion it could get). Bloomberg explains that it involves:
Alibaba and Softbank each would create a standalone entity, investing cash and operating assets in each… Yahoo would then exchange all of its stake in Yahoo Japan and most of its stake in Alibaba for those new entities.
The board is expected to meet today in order to finalise something to keep Yahoo running – either by going to the private equity firms or by this plan.