Yahoo Suspends Plan To Spinoff Its Alibaba Share Stake; Will Evaluate Other Deals

Yahoo Inc.'s stock climbed 2% in premarket trade Wednesday, after the Internet company confirmed earlier reports that it was suspending its plan to spinoff its share stake in Chinese e-commerce giant Alibaba Group Holding Ltd. . Yahoo said it will evaluate an alternative transaction to separate the stake, including a reverse of the previously-announced spin deal. In that case, Yahoo's assets and liabilities, exluding the Alibaba stake, would be transferred to a new publicly-traded company, which would then distribute its stock to Yahoo shareholders, essentially creating two separate public companies. Yahoo said it believed its original plan to separate the Alibaba stake would be tax free, but developments since than led to consideration of other factors. "Among other factors, we were concerned about the market's perception of tax risk, which would have impaired the value of Aabaco stock until resolved," said Yahoo Chairman Maynard Webb. Yahoo owns 384 million shares of Alibaba, which edged up 0.6% in premarket trade. Yahoo's stock has lost 31% year to date through Tuesday, while Alibaba shares have dropped 19% and the S&P 500 has gained 0.2%.

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