Dallas, Texas 07/20/2015 (Financialstrend) – Aabaco Holdings is the new company that will hold Yahoo! Inc. (NASDAQ:YHOO)’s more than $30 billion worth of shares in Chinese e-commerce sensation Alibaba Group Holding Ltd (NYSE:BABA). The search giant has already filed with the SEC to spin off its shares in the Chinese company a transaction set for completion in the fourth quarter.
Tax Free Calls
The new spin-off is to own a total of 384 million shares set for distribution in a tax-free transaction. The new entity is to trade independently in the market and will own a new entity called Yahoo Small Business. Aabaco will operate as a publicly traded non-diversified closed-end fund and not as a regulated investment company.
No policy change is expected to affect the spin off according to CEO Marissa Mayer who has already assured investors that the spinoff will not proceed if it is not tax-free. However, Aabaco could come under scrutiny should authorities conclude it is liable to pay taxes.
Returning Value to Shareholders
The spinoff of the Alibaba stakes is part of Mayer promise of returning value to shareholders having come under pressure from activist investors in the recent past. Yahoo! Inc. (NASDAQ:YHOO) announced the spin-off first in January. Aabaco’s shares will be made of 95% of Alibaba shares with 80% of its assets being invested in the e-commerce giant going forward.
Stakes in Alibaba have been the catalyst behind Yahoo! Inc. (NASDAQ:YHOO)’s impressive run in the market. The stock is already up by 147% from lows of 2012. However, a cloud of uncertainty continues to fill the air on what remains of the embattled search giant on the spin-off of stakes in Alibaba
Investors are expected to judge yahoo based on its prospects on mobile, video and native advertising going forward. Yahoo! Inc. (NASDAQ:YHOO) has struggled to keep up with Google Inc (NASDAQ:GOOG) and Facebook Inc. (NASDAQ:FB) in the advertising business awaiting to see how it will fare in the market without Alibaba stakes