Yahoo! Inc. (NASDAQ:YHOO) Warns Investors Off Potential Road Blocks In Spin Off


Dallas, Texas 07/20/2015 (Financialstrend) – Yahoo! Inc. (NASDAQ:YHOO) filed an filing with the Securities and Exchange Commission under the provisions of the Investment Company Act of 1940 to spin off its remaining stake in Alibaba Group Holding Ltd (NYSE:BABA). The filing of the “Registration Statement” was in line with January’15 plans that had been announced by the tech firm. The spinoff would conclude with the newly formed Aabaco Holdings, Inc. owning on its book nearly 384 million shares issued by the Chinese tech firm. This stake would represent a 15 percent ownership over the Chinese firm. It has been valued at around $32 billion by the analyst community.

In the SEC filing, President and Chief Executive Officer Marissa Ann Mayer led management team has warned its investor community that while they are making all out efforts to complete the transaction on time by end of the calendar year, a potential deal breaker would be any “potential tax” imposed by the U.S Internal Revenue Service.  The company officials have indicated that they would walk away from the Spin off, if the IRS does not give it a written assurance that the shareholders would be protected from being pursed with tax claims over the proposed spinoff.

The Sunnyvale based tech firm has proposed to structure this spin off in a manner which would follow the provisions of a law which offer a tax break. The company hopes to club its stake in the Chinese e-commerce firm with a small piece of its own existing business “Yahoo Small Business” as part of the spin off entities. This approach was expected to insulate the shareholders of Yahoo! Inc. (NASDAQ:YHOO) from paying any capital gains tax. Traditionally, such a capital gains tax would be deducted from the total proceeds raised by a company from its sale of shares to a third party. The reminder of the proceeds would be paid out to the company shareholders.