26 July, AtoZForex – While the world was wondering is Yahoo acquisition real, this Monday gave us the biggest headline in tech this summer. The Yahoo sold its “core business” to Verizon for $4.8 billion. However, the remaining assets of Yahoo are actually much bigger than the “core business”. Most of the company’s $36.4 billion market value comes from the 15% stake in an online commerce company Alibaba Group Holdings and 35.5% in the joint venture with Yahoo Japan Corp. Now the main question is: what’s next for YJFX after Yahoo acquisition?
Huge tax bills
Yahoo Japan was established as a joint venture between Japanese telecommunications, Yahoo and SoftBank – the internet giant. Following the Yahoo Verizon acquisition, Yahoo Japan could also be in the row for sale. However, the potential deal is not likely to materially affect YJFX after Yahoo acquisition. SoftBank currently holds 43% of the company, therefore being a natural candidate for the deal.
While investors hope for a quick sale of the stake, it looks like Yahoo is not in a rush. For years the company was looking for a way to earn money from the investments without paying a huge tax bill. Before selling its core business, Yahoo was exploring the option of selling its Alibaba stakes, however, it abandoned this option. The reason for it is that the US IRS would not guarantee that the deal would be carried out in a tax-free manner.
What next for YJFX after Yahoo acquisition?
Investors are speculating the scenario where Alibaba buys the shares back in some way that would save money on taxes.
“Hopefully by the end of this year, we have some sort of transaction, preferably with Alibaba buying its stake back and Yahoo Japan buying its stake back.”
– said Eric Jackson, managing director at SpringOwl Asset Management LLC, owner of Yahoo shares.
It is clear that such deal will involve some tax as the stakes have appreciated very much in value. However, the exact amount is not clear yet. Meanwhile, bankers and analysts argue that it very possible that Yahoo will divest its Yahoo Japan stake ($8 billion) before making a final decision on the Alibaba stake which is worth more than $30 billion.
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