Yahoo to Spin Off Alibaba Stake

SUNNYVALE, Calif. (San Jose Mercury News/TNS) -

Yahoo plans to return $40 billion to its shareholders by spinning off its huge stake in Chinese e-commerce company Alibaba, the company said Tuesday.

“This level of capital returns is historic, especially for a company of our size,” CEO Marissa Mayer said in a statement announcing she was “proud and happy to announce a plan for a tax-free spin-off of our Alibaba holdings.”

The decision avoids a tax bill that would have cost billions. The company will transfer its long-held Alibaba holdings into a newly formed investment company called SpinCo, a separate publicly traded company.

Mayer had promised in the fall that she would provide some update on the company’s vision for its Alibaba stake this week, although Yahoo cannot sell its shares until at least September, a year after Alibaba went public. Yahoo’s 15 percent stake in Alibaba has been valued at up to $40 billion. Yahoo also has a 35 percent stake in its Asian affiliate, Yahoo Japan, worth about $8 billion, which it plans to keep for now, the company said.